Bulgaria’s Government relinquished its preferred stock in former state fixed-line monopoly Bulgarian Telecommunications Company (BTC) at the shareholders meeting on September 30.
Last week, the Cabinet authorised Transport Minister Danail Papazov to vote in favour of transforming the state’s preferred stock – commonly referred to by Bulgarian media as the “golden share” – into common stock.
The Bulgarian state has held the “golden share” since the privatisation of BTC in 2004 and has last used it to block a majority shareholder decision in 2008, when it stopped BTC from selling about 100 real estate properties, buildings that the company has owned since before the fall of communism in 1989.
The Cabinet said that its decision to relinquish its preferred stock in BTC was prompted by the fact that all the conditions set in the privatisation contract have now been met, but also the fact that the “golden share” has accomplished what it was meant to do – a smooth transfer of ownership into private hands, continued operations and asset-stripping.
BTC changed owners last year, when it was acquired by the consortium between Bulgarian lender Corporate Commercial Bank (CCB) and VTB Capital, the investment arm of Russia’s Vneshtorgbank.
Creditor banks took possession of BTC in 2010 after its majority shareholder PineBridge Investments (the former asset management arm of US insurer AIG, acquired by Hong Kong tycoon Richard Li) breached bond covenants.
BTC, which operates under the Vivacom brand, went through three ownership changes after its privatisation in 2004, with each subsequent sale resulting in more debt as the new owners piled the acquisition costs onto the company itself.
The bulk of BTC’s debt had been contracted as part of its acquisition by AIG from Icelandic tycoon Thor Bjorgolfsson in 2007, but most of it was restructured in October 2012, when creditor banks approved the plan put forward by CCB and VTB Capital, which reduced the company’s debt burden from 1.7 billion euro to 588 million euro.