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Bulgaria's Dominant Telecoms Provider Owner Piles Up Losses

Date: 06.07.2010

NEF Telecom Bulgaria, a unit of AIG Global Investment and current owner of Bulgaria's dominant telecoms provider Vivacom, is piling up losses, shows the consolidated audited report of the company for 2009, published in the trade register.

The report makes clear that negotiations for restructuring debts owed by Bulgarian phone company Vivacom AD were held as early last year, but no agreement has been reached by the time of its approval in the middle of 2010.

The news comes on the heel of reports that Hong Kong billionaire Richard Li is holding talks with large US and European banks and US companies to restructure EUR 800 M of debts owed by Bulgarian phone company Vivacom AD.

The funds were borrowed two years ago by Vivacom’s previous owner American International Group Inc. to acquire the company from Icelandic billionaire Thor Bjorgolfsson, the Standart daily said, citing unidentified persons.

Royal Bank of Scotland Group Plc, Deutsche Bank AG and US companies are among the creditors with whom Li is negotiating, the newspaper said.

Li, chairman of Asian telco PCCW, inherited control of Vivacom in March as part of the acquisition of AIG Investments, a unit of the troubled US insurance group which spans asset management and private equity investments. The unit was renamed Pinebridge Investments ahead of the takeover by Li's Pacific Century group.

US insurance giant AIG bought 90 % of the company's shares in August 2007 for EUR 1.4 B, later launching an offer to buy out the remaining shares.

Vivacom dominates the fixed-line segment with 2.9 million phone lines, which accounts for 97 % of the market, but it has been losing customers at an alarming rate in recent years, due to the spread of mobile communications and alternative telecoms in the country.

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