Bulgaria's MobilTel buyout sets records for the region

Financial News Online - 27 May 2004, Caroline Meehan - A private equity consortium has bought MobilTel, Bulgaria's biggest mobile operator, in a 1.2bn ($1.5bn) deal which is central and eastern Europe's largest leveraged buy-out.

A consortium of seven private equity groups led by ABN Amro Capital, Citigroup Investments and Communications Venture Partners, an Austrian private equity firm specialising in wireless telecoms, put 450m of equity in the deal to acquire 40% of the company.

Three existing investors, Austrian private investors Martin Schlaff, Josef Taus and Herbert Cordt, have cashed in part of their 70% stake and now own 60%. Bawag, an Austrian bank, has sold its 30% stake. Citigroup advised MobilTel Holdings, the holding company which represents interests of the original four owners.

The deal is a sought-after triple play for Citigroup, which along with equity and M&A advice, lead-arranged debt financing jointly with ABN Amro and ING. Citigroup said is Bulgaria's largest debt financing, with a syndicated corporate euro loan of 650m. MobilTel's net cash balance of 100m makes up the remainder of the financing. The consortium did not appoint an external adviser.

The change in ownership structure had sparked market speculation of a trade sale.Telekom Austria said this week it is interested in MobilTel, and Germany's Deutsche Telekom and the UK's Vodafone said they are interested in investing in the region.

Interest has accelerated in private equity investments in central and eastern Europe after the joining of the accession countries on May 1. Players such as Baring Private Equity Partners, Advent International and Central Europe Trust have established themselves over the last decade and the availability of bank debt has been an important driver in development of the leveraged buy-out market.

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