Epic Financial Consulting Gesellschaft, the private equity group that helped George Soros’ Quantum Fund in eastern Europe, wants to complete financing for its $1.33 billion acquisition of VAT Ukrtelecom by the second week of March.
“It’s a full price and the banks are giving it a very hard look,” Managing Partner Peter Goldscheider said today in an interview from Vienna. “This is by far the largest challenge we’ve ever had.”
Epic is currently in discussions with banks, said Goldscheider, who declined to say which financial institutions may provide funding. The European bank for Reconstruction and Development, which said it might help with financing, has not been contacted by Epic, the spokesman for the EBRD, Anton Usov, said by phone from Kiev.
Ukraine’s sale of Ukrtelecom will be the largest state asset deal since 2005, when the former Soviet republic sold its biggest steel mill to ArcelorMittal for $4.8 billion. Ukrtelecom’s sale has been put off for more than a decade because of disputes between state agencies.
The government, which owns almost 93 percent of Ukrtelecom, initially planned to sell the phone company in a Dec. 28 auction. Since Epic was the only bidder, Ukraine hired an independent company to value Ukrtelecom. The proposed price for Epic exceeded the minimum auction price by 75 million hryvnia, according to the state fund.
“The price was Ukrtelecom is adequate, given the company’s situation,” said Alexander Paraschiy, an analyst at Kiev-based BG Capital investment bank. “The open question is financing but I think that the deal will be completed. Since Epic is reported to be close to Ukraine’s top political officials and businessman, the current Ukrtelecom management will probably stay in place.”
Epic said the Ukrtelecom takeover would amount to a “landmark deal” for the group, which currently employs around 3,000 people in eastern Europe. Shares in the Ukrainian network operator, with 82,000 employees, may be listed or sold to another investor, Goldscheider said.
“We’re looking at a three-year plan to take the company forward under various scenarios,” Goldscheider said. ESU LLC, Epic’s Kiev-based telecom services company, will help oversee Ukrtelecom’s transformation, he said.