WE AGREE THAT THE STATE TAKES HALF OF BTC'S DIVIDEND
Joanna James, Managing Director of Advent International for Central and Eastern Europe, to the BANKER weeklyOn June 19 Advent International sent a letter to the Privatisation Agency (PA) on behalf of Viva Ventures in which we expressed our readiness to raise the purchase price for a 65% stake in the Bulgarian Telecommunciations Company (BTC) to EUR280MN. The amount includes the EUR50MN, intended for the capital increase.The other parameters of the deal have not been changed. They include investments of EUR700MN and refinancing of the state guarantees on BTC's loans, worth EUR70MN. We have drafted a 5-year investment programme, which is a part of the business plan presented to the creditor banks. The aggregate amount of investments in it is EUR700MN. The distribution of funds in the course of time has been projected in compliance with our expectations about BTC's development. We are obliged to observe that plan under the contracts we have closed with the banks. We have projected higher investments than the minimum of EUR400MN required by the PA because we have preestimated we would need more money in order to achieve our business purposes. As could be seen from Advent's experience in the sphere of investments in telecommunciations, we implement our plans in due term, and our reputation worldwide is based on our successful operation in more than 35 countries. In the course of negotiations with the PA the number of employees to be sacked was reduced by some 25% to 6,800 lay-offs (editor's note - when the negotiated contract was endorsed on March 21, the PA announced that 6,400 lay-offs in the course of four years had been agreed). In addition, we have proposed a social programme worth EUR45MN and we have cut down the management remuneration to 2.25% (editor's note - Viva Ventures initially required to get 7% of the proceeds from the telecom's operation under the contract for BTC's management).Obviously, this offer could hardly be competed at present. The second part of our letter dated June 19 concerns the dividend due for 2002. We agree that it remains for the State. We mean the entire dividend which the State has received so far, and it is half of BTC's profit, or about EUR50MN. (Editor's note - on May 9 the Minister of Transport and Telecommunications Plamen Petrov signed an order for distributing 50% of BTC's profit as dividend to the State. The amount should be remitted to the Treasury by July 15, 2003). Advent will not oppose to that usual practice. We are even ready to support the State in front of the creditors for getting a permission to distribute the profit in that way. As you know, the EBRD (editor's note - one of the banks that had launched state-guaranteed loans to the BTC) is within our consortium. We have already spoken quite a lot about the ownership in Viva Ventures. It is clear and transparent, proven and lawful. Viva Ventures will hold the 65% stake in BTC. The company has been set up especially for the purpose, which is an usual practice in the world for such deals. It is known that when the deal is closed shares in Viva Ventures will be acquired by companies, owned by nine leading investors - Advent International, the EBRD, Swiss Life, Enterprise Investors, the National Bank of Greece, the Dutch Bank for Development (FMO), Farmaco's Iceland owners (editor's note- the company that controls Balkanpharma), investment authorities of Abu Dabi, and the Europe Capital Management Fund. All these companies are long-experienced in international investments. Advent will remain the leading investor to control the telecom's development and manage 65% of the votes in BTC's general meeting. A particularly important fact is that the above-mentioned companies have been thoroughly checked by Bulgarian security authorities, the property of each one of them has been confirmed, and the participation of leading investors proven.