On November 28, 2016, CEELM reported that the Bulgarian electricity power distributor Energo-Pro Varna EAD had sold seven-year bonds worth of EUR 130 million to international investors. We invited Tsvetanka Vasileva, Head of Legal and Compliance at Balkan Advisory Company to provide us an insider’s view on the matter.
CEELM: Energo-Pro Varna's bond issuance was reported to be the largest bond sale in Bulgaria. What were the specific challenges a deal of this size entailed?
T.V: The biggest challenges were related to size of the deal, keeping a very high hurdle on minimum size when deals of that size, even on the minimum size, are rarely seen in Central and Eastern Europe. We succeeded in reaching high diversity between foreign and local investors, which ended up 50/50, as well as type of investors, having one IFI, regional banks in Central Europe, South Eastern Europe and Austria, local pension funds, asset managers, and corporate treasuries.
CEELM: The bonds were placed with investors from Bulgaria, Austria, and Central and Southeastern Europe. Did managing a wider geographical scope pose any challenges and how did you overcome them?
T.V: Yes, it involved preparing a prospectus that touches not only on Bulgaria law, but more importantly incorporates many aspects of UK law effectively into Bulgarian law. We had 17 different versions of the Offering Circular, but regardless never lost an investor, despite the resignation of the Bulgarian government on the final day of issuance.
CEELM: Why did you turn to Boyanov & Co. for advice on the deal?
T.V: Because of past successful experience and several deals together. They have excellent capital markets experience, and we were very happy with their work.
CEELM: How did you split the work between your in-house legal team and your external counsel?
T.V: The work was split among our in-house team and our legal advisers of Boyanov & Co. The Issuer's Counsel of Tsvetkova, Bebov & Partners also provided significant part of the work and dedicated their effort to a very successful deal. Ultimately, I consider the two law firms involved to be the best in capital markets in Bulgaria and among the best in the region.
CEELM: Drawing upon this experience, what are the critical aspects that a GC has to particularly be on the lookout when working on such an issuance? What were things that, looking back, you would have taken more time if possible to work more on?
T.V: A critical point was working on dual language versions on the legal side. One of the challenges we always find critical to saving time is working with capable translators in the financial area. This still continues to be a challenge everywhere in South-Eastern Europe, but at least the help of the Issuer's Counsel and our legal advisers helped a lot to circumvent this issue.