Банкеръ Weekly



Just before the New Year's Eve, the Bulgarian National Bank (BNB) allowed the Icelandic businessman Thor Bjorgolfsson to acquire 34% of the capital of EIBANK. The stake will be owned by the Luxembourg-registered Novator Finance Bulgaria company which is property of the Valhmar Group Limited holding controlled by Bjorgolfsson.
The acquisition of the shares will be carried out under a scheme negotiated with the Icelandic businessman on September 8, 2005. On that day, the Chairwoman of EIBANK Supervisory Board Tsvetelina Borislavova and he signed an agreement according to which, as soon as BNB permits, through one of his companies Bjorgolfsson would buy 15% of the EIBANK shares and further 19% after the bank's capital is increased from BGN56MN to BGN69.72MN. Calculations show that in order for the scheme to be fulfilled, the Icelander will have to pay all the BGN13.72MN which represent the bank's capital increase.
BNB's permission came nearly four months later, as the central bank experts made a detailed analysis of the financial status of the companies owned by the Icelandic businessman and the origin of the money his companies use to buy slightly more than a third of EIBANK's shares. It is said that all balance sheets and profit and loss accounts of both Novator Finance Bulgaria and Valhmar Group Limited since 2000 have been inspected, as well as the shareholders of the two companies.
The detailed investigation of all holders of bank shares who own more than 3% of a bank's capital in Bulgaria was introduced in 2002 as a consequence from the Patriot Act adopted in the US in the aftermath of the terrorist attacks in New York. According to the requirements of this act, all companies operating with American companies had to provide detailed data about their owners through a special agent company registered in the US.
The amendments to the Law on Banks adopted in 2002 were also provoked by the fact that the owners of many Bulgarian credit institutions hid behind a great number of offshore companies each of which owned less than 10% of the shares of the banks. This is how the real owners evaded the requirement obliging them to ask for BNB permission in order to buy more than 10% of the capital of a bank and prove that the money they use is not borrowed and they have paid the taxes due. It was impossible to establish these facts in the case of numerous offshore companies as the anonymity of their owners is guaranteed by the legislation of the state in which they are registered. That is why BNB obliged all companies that own 3% or more of the capital of a bank to provide detailed information about their financial indicators and shareholders. As a result from this requirement, almost all banks announced who their majority owners were.
However, EIBANK's capital remained scattered among many small shareholders, with the largest stake, 16.3%, now being controlled by Tsvetelina Borislavova, Chairwoman of the Supervisory Board. After the deal with Thor Bjorgolfsson is completed, his company Novator Finance Bulgaria will hold the largest number of shares representing 34% of EIBANK's capital.
In 2005, the Icelander became one of the biggest foreign investors in Bulgaria. His Actavis Group is the owner of a 93% stake of the capital of Balkanpharma-Razgrad, the same stake of the capital of Balkanpharma-Dupnitsa, and a 90% stake of the capital of Balkanpharma-Troyan. He is also owner of Hygia, one of the big medicines distributors in Bulgaria. Through a subsidiary of the Iceland National Bank (Landsbanki Islands) in which Bjorgolfsson controls 45.8%, he acquired 10% of Elana Agricultural Land Fund a month ago.
In the spring of 2005, Thor Bjorgolfsson bought 10% of the shares of the Bulgarian Telecommunication Company (BTC) through the Bulgarian Stock Exchange. At the end of November, his company Novator Telecom Bulgaria signed an agreement with the majority owner of BTC, Advent, stipulating that in 2007 it would buy its 65% stake in BTC. The deal can only be signed after June 11, 2007, when the three-year prohibitory term expires for changes in the ownership of the telecom after its privatisation. Moreover, the deal must be permitted by the Communications Regulation Commission and the Commission on Protection of Competition.

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