Not friendship but interests last forever. The same is true about card operator Transcard and Investbank.
Some five years have passed since the owners of the two companies, Mitko Sabev and Petya Slavova, respectively, separated their business and their private lives (the two have lived together for many years and have a son). Now, however, they are again shareholders in a company. The stock exchange announced recently that Investbank is acquiring 8.32 pct in Transcard.
The Reason Why
The stake of Petrol Holding in Transcard exceeds 50 pct when its subsidiary Transhold Bulgaria Holding acquires 8.0 pct. The law requires the company to pitch a buyout bid to the other shareholders. “This did not happen and so the majority owner had to sell the margin over 50 pct,” explains Hristo Georgiev, board of directors chairman at Transcard and indirect shareholder in the company through Sistec Holding. Otherwise Petrol Holding cannot vote at general meetings.
According to company reports, it passed the 50 pct threshold in the third quarter of 2005. In other words, almost two years Petrol Holding and later Transhold (to which the holding company transferred its whole stake) did not have the right to vote. Now there must be an urgent need to change this perhaps because of the general meeting scheduled for October 30.
“Investbank was the logical choice,” said Georgiev pointing to the two companies’ partnership in the card business and the common past of Slavova and Sabev. The bank and the operator joined hands about a year ago when Transcard went through a painful separation with Piraeus Eurobank. In early October 2006 it turned out the company’s clients could not pay via their cards because there was no servicing bank to register the credits. The reason was that the law allows only a bank or a licensed system operator (which Transcard is not) to issue electronic money (credit cards included). The company rushed to team up with a new financial institution. Mitko Sabev even revealed plans to apply for a licence from the central bank and turn Transcard itself into a bank. For now it is only known that Investbank got the operator out of the trouble by agreeing to service the cards.
The Price
The price of the deal is an exciting question. In August Sistec Holding sold 8.71 pct at 4.0 levs a share to Fortaleza Finance owned by Maria Valeva, board member of Transcard. Two months later Investbank bought nearly the same stake for 1.0 levs a share although the stock still traded at 4.0 levs on the bourse. The company, however, has a very small liquidity and the free float made up 0.24 pct of the total at the half-year. Therefore the price at which shares occasionally change hands can hardly be called market price. “The value of a company includes also the current financial results as well as some other parameters and is expressed in the price at which the deal is struck,” explained Tsanko Kolovski, board member and managerial agent of Investbank. And the company’s financial performance is not very rosy. The consolidated loss came in at 6.0 mln levs in the first half of 2007 against an authorised capital of 7.0 mln levs. Hristo Georgiev attributes some of the trouble to the split-up with Piraeus Eurobank and says he could see the light at the end of the tunnel. However, Transcard’s ipo prospectus shows the company has been piling up core-business losses since 2002.
It is interesting to see whether Petya Slavova or a representative will join the company’s management. The agenda of the general meeting says there will be reshuffles in the board of directors. “We do not plan participation in the management yet,” says Tsanko Kolovski.
Future Sale of Transcard
“We are ready to negotiate a sale of a stake in the company. Banks have shown interest but there is nothing specific,” said Hristo Georgiev. The large Israeli lender Leumi was once interested in the company but no deal was done.
There is no news about the planned banking licence. Perhaps the central bank turned down the application in line with its conservative licensing policy.
Transcard
Before the entrance of Investbank, the majority stake was in the hands of Sistec Holding (33.44 pct) and Transhold Bulgaria Holding, which holds 58.32 pct together with its owner, Petrol Holding. The latter is owned by Mitko Sabev and Lithuanian businessman Denis Ershov. Transcard was set up in late 2001 and was the first to launch non-banking credit cards in Bulgaria. It went public in June 2005.
Investbank
Petya Slavova holds 97 pct in the bank through Festa Holding and her Vincom. Slavova acquired the bank in 2002 when she divided her business with Mitko Sabev. Investbank remained under her control whereas Sabev got Eurobank, which he sold to Greek Piraeus in 2005.
$1 = 1.3804 Bulgarian levs
13-19/10/07, P81
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