Slovenia Weighs Telekom Sale to Cinven to Lure Investor Cash

To sell or not to sell? That’s the dilemma Slovenia faces as it mulls allowing the takeover of the national phone company by a private equity firm to boost investors’ trust and recoup part of the $3.6 billion it spent to fix the ailing banking industry.

The Slovenian Sovereign Holding agency may announce as early as Wednesday its decision on a conditional bid by Cinven Group for 73 percent of Telekom Slovenije d.d., the sole offer after Deutsche Telekom AG backed out. The agency has rejected Cinven’s offer, Finance newspaper said without citing anyone. Natasa Novak, the spokeswoman for the agency declined to comment on the report, saying only the session will start at 5 p.m. in Ljubljana.

The government needs to balance the risks of a deal with a non-industry investor committed to restructuring its biggest company and showing investors it’s serious about selling state enterprises. Telekom is the biggest of 15 firms identified for sale two years ago as the first former-communist nation that adopted the euro recovers from an economic and banking slump that threatened to push it toward an international bailout.

“It is more important that asset sales do take place,” Gunter Deuber, the head of research at Raiffeisen Bank International AG in Vienna, said in response to questions by Bloomberg Moving ahead with state-asset sales “is important to support the reputation of Slovenia as an investor-friendly location.”

Premier’s Support

Slovenian Prime Minister Miro Cerar expects the sale to be approved, he said ahead of a European Union summit in Brussels, according to Delo newspaper. Slovenia “lost too many opportunities and we can’t afford to lose another one,” Cerar was quoted as saying Wednesday by the paper.

Telekom Slovenije shares closed unchanged from Tuesday at 98 euros after gaining 2 percent in earlier trading in Ljubljana, according to data compiled by Bloomberg. The stock has lost 32 percent this year, giving the company a market value of 640 million euros, data show. The shares traded at a record 498 euros per share in March 2007.

“If they really sell to Cinven, they will show their commitment to privatize state assets even to buyers that are not the best choice,” Lutz Roehmeyer, a director at Germany’s Landesbank Berlin Investment, said in a phone interview from Berlin Tuesday.

Should the transaction take place, the European Bank for Reconstruction and Development is considering Cinven’s offer to finance a portion of the acquisition by providing possibly debt and or equity, the lender said last week.

Earlier Failure

“It’s possible the sale won’t go through, which happened in Slovenia several times, though I think the likelihood is greater the deal will be done,” Radivoj Pregelj, a money manager at Triglav Skladi, the asset-management arm of insurer Zavarovalnica Triglav, said in an e-mail. “A non-sale wouldn’t only negatively impact Slovenia as an investment destination, but would also hurt other stocks on the Ljubljana stock exchange.”

A previous effort to sell the company fell through in 2008, when the administration of then-Premier Janez Jansa gave up on two bidders, Skipti hf from Iceland and a group led by Bain Capital LLC.

Before it's here, it's on the Bloomberg Terminal.