VTB could have sold its stake in Bulgartabac for much less than its market value / M. Stulov / Vedomosti

According to the Austrian registry, BT Invest GmbH, which owns 79.83% of the Bulgarian cigarette manufacturer Bulgartabac, has changed its owner: 100% of the company is now owned by Livero Establishment. Previously, the company belonged to the Cypriot VTB Capital Pe Investment Holding Ltd. The press service of VTB Capital declined to comment. Bulgartabac did not respond to Vedomosti's request.

BT Invest acquired Bulgartabac at a privatization auction in November 2011, paying 100.1 million euros for 79.83%. BT Invest committed to invest 7 million euros in Bulgartabac over two years and to purchase 5,000 tons of Bulgarian tobacco per year over five years. VTB announced plans to sell the company to a strategic investor in March 2013.

Bulgartabac was sold last year to local Bulgarian investors, a source in the VTB Group said. According to him, the asset was sold with a 30% premium to the entry price. It turns out that the deal could have been worth approximately 130 million euros. On the stock exchange, the BT Invest package is worth significantly more: on Friday, Bulgartabac's capitalization on the Sofia Stock Exchange was $485.3 million. Last year, the company was worth even more: on December 27, 2013, it was worth $549.6 million.

Livero Investments, registered in Liechtenstein, applied to acquire BT Invest GmbH in mid-February, a representative of the Bulgarian Commission for the Protection of Competition (CPC) reported. In late February, the Bulgarian newspaper Kapital reported, citing the CPC, that Livero Investments is solely controlled by TGI Middle East, but its beneficiaries are unknown. According to Kapital, the company is associated with Bulgarian banker Tsvetan Vasilev, the owner of Corporate Commercial Bank (CCB, one of the largest banks in Bulgaria). CCB and VTB Capital have long been partners: in 2012, they acquired 93.99% of Bulgarian Telecommunications Company (the Vivacom brand), and in 2013, VTB Capital bought 9.9% of the shares of CCB itself. Vasilev's representative did not respond to Vedomosti's letter.

Bulgartabac is the largest cigarette manufacturer in Bulgaria (produced 27 billion cigarettes in 2013): according to its own data, it occupies 32% of the market, a significant part of production is exported. The company's revenue for 2013 amounted to 499 million leva (255 million euros at the exchange rate on March 28).

In recent years, there have been no large deliveries of Bulgartabac products to Russia. Last year, it became known that Bulgartabac was planning to return to the Russian market with Rodopi, VT, Stewardessa, and Opal cigarettes. Cigarettes under these brands are produced for Bulgartabac by the Pogar Cigar and Cigarette Factory. The chairman of the factory's board of directors, Igor Moiseyev, says that the change in the company's owner did not affect the contract (but he did not disclose its terms).

The deal does not look like a market deal: if it was closed last year, it means that the buyer did not wait for the annual results, and, given the sale price, the deal could have been “friendly” or VTB Capital was trying to get rid of the asset faster, believes Maxim Korolev, editor-in-chief of the industry news agency “Russian Tabak”.

VTB has run out of tobacco