PineBridge eyeing last-ditch Vivacom deal-sources

PineBridge eyeing last-ditch Vivacom deal-sources

Owner PineBridge could be left with token stake-sources.

October 27, 2010 11:08 by Reuters

Hong Kong billionaire Richard Li could lose all but a token stake in his Bulgarian telecom firm Vivacom as Dubai’s Oger Telecom and creditors home in on a takeover next month, four sources close to the matter said.

Li’s PineBridge Investments, which controls Bulgaria’s top fixed-line operator, is trying to strike a deal which would leave him with some value as lenders finalise a debt-for-equity swap, the sources said.

PineBridge could be offered 1 or 2 percent of the former state monopoly, two of the sources said.

“The outcome is pretty much certain but there are still talks about a price for a consensual deal with PineBridge,” said one of the sources, adding it was an “exit deal” after Vivacom was forced into a restructuring to avoid covenant breaches.

However, another source said PineBridge was still looking to inject new money into the firm alongside other investors to try to retain a larger stake.

A debt deal already sanctioned by lenders would allow Dubai-based Oger, which has long had Vivacom in its sights, to take a minority stake in the company after teaming up with creditors for a 125 million euro ($174.4 million) new capital injection.

“Lenders might feel that an extra cash injection would help cut debt further,” said the second source.

If PineBridge fails to strike a deal, a takeover by creditors would likely come at the end of November, after a covenant waiver expiring on Oct. 29 is extended by a month, the sources said this week.

Vivacom, known as Bulgarian Telecommunications Company (BTC) until last year, was lumbered with a 1.645 billion euro loan from its 2007 buyout by AIG. Li later bought the stricken insurer’s asset management arm, remaned as PineBridge.

Vivacom’s lowest-ranking mezzanine creditors, which include hedge fund Tennenbaum Capital Partners and Royal Bank of Scotland and which are owed at least 325 million euros ($456.2 million), trumped an earlier restructuring offer from PineBridge, with the blessing of senior lenders.

PineBridge’s offer would have at least partly wiped out mezzanine lenders, the sources said.

(Reporting by Sarah White; Editing by Louise Heavens)