Schoenherr Sofia Managing Partner Alexandra Doytchinova starts by talking about what’s happening — or rather, what’s not happening — in the Bulgarian legal market. “Nothing has moved,” she says, "which is not surprising, because Bulgaria is very conservative in this respect. Firms splitting and merging happens once in five years, if at all. So there’s nothing happening there on this front.”
In terms of business, however, things seem to be moving along so far in 2019. She reports that her firm worked on several major deals so far this year, including the Societe Generale Bulgaria sale that closed in January and the acquisitions by Ireland’s Smurfit Kappa of BalkanPack, a corrugated board and packaging manufacturer, and of Vitavel, another Bulgarian manufacturer of corrugated board and corrugated board packaging. She describes those as "huge transactions for us.” Still, she notes that while “we are satisfied with the first half of the year, we’re completing matters which actually started last year. We’re fairly busy — we can’t complain about utilization — but it’s more finishing existing projects and work on commodity deals than starting new major ones.” She says, “there will be follow-up work on the deals we’ve worked on, so we’re confident we’ll be busy enough, but in terms of new really big transactions, the market is not too optimistic, at least from the current perspective."
Of course, there are still some major projects happening. "The concession of the Bulgaria airport, of course, is huge,” Doytchinova says. “That’s the biggest infrastructure project currently on the market.” She cites reports that there are five bidders in the running, with two in particular considered to be ahead. The result of the process is expected for June, she says, noting that “the decisive criteria will be anyway on the commercial side, including envisaged investments — not legal.”
Doytchinova reports that "another thing that’s a bit of a painful process for various reasons, including political, is the sale of CEZ Bulgaria's assets.” Last year’s SPA between CEZ and Bulgaria-based Inercom for reportedly approximately EUR 320 million was blocked by Bulgaria's Commission for Protection of Competition, which concluded that the deal could lead to the establishment of a dominant position. Although Inercom’s appeal is still under consideration, CEZ has reportedly now terminated the SPA (citing “unlawful obstructions” by Bulgaria regarding the deal) and is now conducting exclusive talks with another investor, EuroHold Bulgaria— a Bulgarian listed investment group. There’s also been some interest from India Power.
Doytchinova also refers to the continued reports that the Bulgarian Telecommunications Company (operating as Vivacom) will be for sale still this year and cites media coverage that the shareholders have hired investment bank Lazard to structure the sales process. According to her, “that’s basically the next biggest thing for the market.”
Finally, the Schoenherr Sofia Managing Partner turns to the subject of new Bulgarian regulations related to EU’s anti-money laundering directives that require Bulgarian companies and formations to register (and so make public) their ultimate beneficial owner(s) with the Bulgarian commercial register. The new regulations are creating a huge amount of paperwork, she says, "because Bulgaria is being 'the best student in class,’ and is requiring loads and loads of information obtained from clients, and hundreds of pages to be translated and filed with the register.” According to Doytchinova, "especially with larger clients it’s a bit of a saga, as you have to list not only the ultimate owner(s), but also all the interim entities holding indirect control and their complete data, including all their representatives set out by name, their respective citizenship, addresses, and so on.” As a result, she says, “this is going to be the predominant work of corporate departments in Bulgarian law firms for the next two weeks, because the deadline is May 31.”