Bermuda-based Central European Media Enterprises Ltd. (CME) has entered into agreements to acquire from Top Tone Media Holdings Limited an 80% interest in two Bulgarian television channels, the buyer said in a press release on its corporate website.

CME is buying the TV2 channel, a national terrestrial network launched in November 2007, and Ring TV, a sports cable channel.

Total consideration for the 80% interest, which is payable in cash, is expected to be approximately $172 mln, before adjustment for debt and working capital as well as a holdback to cover potential undisclosed liabilities, said CME.

Closing is expected to occur within two weeks.

Michael Garin, CME's chief executive officer, commented: 'This acquisition is an important next step in the continuing expansion of our free-to-air broadcasting operations in Central and Eastern Europe. Our entrance into the Bulgarian market represents the first new CME territory in three years and demonstrates our ability to continue our growth strategy within the region. The TV2 Group, with a core free-to-air national network and supporting assets such as niche cable channels, is an exceptional fit with our multi-channel business model. We look forward to entering Bulgaria, which has a dynamic economy and a rapidly growing television advertising market.'

Adrian Sarbu, CME's Chief Operating Officer, commented: 'Bulgaria represents an excellent opportunity for CME. The Bulgarian TV market is dominated by a few key players and I firmly believe in CME's ability to achieve market leadership within the next 5 years.'

Following the closing of the transaction, Top Tone Media Holdings will have a put option to sell its 20% interest in the business from the fifth anniversary of the closing at a price based on an agreed valuation. CME has the right to call a 14% interest from the fifth anniversary of the closing.

The Bulgarian net television advertising market was approximately $168 mln in 2007 and is forecasted to experience a compound annual growth rate of 20% between 2008 and 2012, said CME.(Dnevnik)

The Sofia city court will deliver its ruling on the insolvency case against indebted Bulgarian steel maker Kremikovtzi within the next two weeks, said a lawyer for one of the company's creditors on Tuesday.

Excluding the notes secured with Kremikovtzi assets, the debts of the company have topped 1.6 bln levs, said Nikolai Stoinov, a lawyer for Rua Invest&Trade Inc. The company, a Kremikovtzi creditor, is controlled by Konstantin Zhevago, a Ukrainian billionaire interested in the ailing Bulgarian steel maker.

If the value of the Kremikovtzi notes is factored in, the liabilities of the company would soar to over 2 bln levs, said Stoinov.

Kremikovtzi is yet to release a financial statement for Q1 2008 or a consolidated financial report for 2007.

It is not clear how the rankings of the Kremikovtzi creditors will be sorted out under UK and Bulgarian law and which one will have precedence, a City source told Dnevnik.

According to the source, UK law provides for the claims of first ranking secured creditors to be satisfied 100%.

Under the Bulgarian commercial law, the state is always the top-ranked creditor in case of insolvency.

The source was doubtful if the dismemberment of Kremikovtzi assets would raise enough cash to satisfy the bondholders and the claims from all other creditors.

Because the steel maker used some of the money raised with the notes to retire 71 mln euro in debts to the National Social Security Institute and power utility NEK, making the state the second-biggest beneficiary of the bond proceeds, and on account of the fact that the state is still a 25% shareholder in the steel company and has a seat on the supervisory board, the government could end up on the receiving end of a lawsuit if the bondholders are short-changed, said an official from an international investment bank that has been following the Kremikovtzi story.

Sources close to the process said some bondholders are concerned by the fact that Zhevago was partial to the appointment of a company administrator in April this year thus safeguarding his interests and putting into question the level-playing field among the creditors.

It emerged in mid-July that the committee of the bondholders had decided to take control of the steel mill, whip it into shape and sell it on to the strategic investor with the highest bid.(Dnevnik)

AES Geo Energy, majority-owned by U.S. power company AES Corporation, and local company ICS have applied to the Bulgarian power regulator to be issued permits for the production of electricity.

AES Geo Energy plans to build a 201MW wind farm in the coastal Kavarna area.

The 6.0 ha footprint of the wind park is made up of company-owned and municipal plots.

The investor will first install 51 wind turbines with a combined capacity of 156MW. Another 15 turbines will be added during the second phase of the project. The facility should be operational by 2010.

Locally-owned ICS will install 4 wind turbines with a combined capacity of 12MW.

The project, due for completion by July 2010, is financed by Eurobank EFG Bulgaria.

(Dnevnik)

The size of the Bulgarian banks' mortgage portfolio has now equaled the consumer credits on their loan books, shows data of the central bank by the end of June 2008.

Mortgage loans topped 6.765 bln levs by the mid-year mark versus 6.802 bln levs in consumer loans.

The share of mortgages in total household loans is up to 41.6% from 25.8% three years ago.

The mortgage lending has been outpacing all other banking segments, posting end-June growth rates of 72.4% and 74.6% in 2006 and 2007.

That momentum subsided somewhat to 64% by the end of 2007 and then further to 53% by mid-2008.

The consumer loan share in the banks' retail exposures stood at 41.8% at end-June versus 56.3% three years earlier.

The segment grew by year-on-year margins of 23.3% and 17.1% by end-June 2006 and 2007, respectively. Consumer lending increased by 47.3% year-on-year in the first half of 2008.

The central bank attributed the robust household lending market to positive trends in employment and income growth.

Mortgage lending is expected to slacken off as higher rates deter borrowers.

The central bank expects domestic credit growth to slow to around 40% by the end of 2008.(Dnevnik)

The Sofia city court has suspended all rights exercised in respect of the stock of Aroma, the publicly traded Bulgarian cosmetics maker.

As a result all Aroma shareholders will be unable to exercise rights related to the free trading of the stock, dividend payment and voting at general meetings, among others, said the company.

The court has ordered a stock injunction to secure a claim pending over the next month

Aroma said it received on July 23 and 29 notifications from two private enforcement agents regarding the court injunction.

'You don't need a legal degree to realise that this is a ridiculous and brash infringement of ownership rights,' said Lukan Lukanov, chairman of the Aroma supervisory board.

'A third party - in this case, the shareholders, cannot be made liable for future claims against the company. The only liable party is the company,' said Lukanov, noting that the company has over 600 shareholders at home and abroad.

The company official dismissed the development as an indication of a 'corruption scheme and practice'.

Future claimants are required to present to the court proof of the likely merits of their claim.

The court has the authority to require that the claimant provide guarantees against a frivolous claim and to set a term for the filing of the claim.

In the Aroma case, no guarantees have been requested. The claimant has one month to lodge his claim.

The claimant in this case is Krasimir Mitev, a former Lukanov business partner.

Mitev said his claims stem from a long-running dispute between the estranged business partners. He said he is in the process of having his rights as an Aroma shareholder restored in court.

The Central Depository, which will enforce the court ruling, declined to comment on Tuesday.

The bulletin of the Sofia stock exchange indicated that the Aroma stock was still trading on Tuesday.

A total of 1,162 shares changed hands on Tuesday with the stock slumping 18.49% to 2.20 levs per lot.

Experts said the legal option to enforce such a measure against the rights of all shareholders is a legislative flaw that should be fixed.(Dnevnik)