Category: Bulgaria

Tsvetkova Bebov & Partners has advised Dronamics Capital on IPO and listing on the Beam market of the Bulgarian Stock Exchange.

According to the firm, “Dronamics Capital [is] a special purpose vehicle established with the main purpose of investing the raised capital in Dronamics Global Limited … [making] this transaction akin to a special purpose acquisition company IPO.”

Dronamics Global Limited “develops a novel proprietary unmanned aerial vehicle for transporting cargo, promising to start a new era in international shipping with related costs of only a couple of euros and a delivery universe of more than 2,500 kilometers,” Tsvetkova Bebov & Partners reported. “The Dronamics Capital IPO … was 4.5 times oversubscribed by many institutional and retail investors, evidencing the strong investor demand for innovative products on the Bulgarian capital market.”

TBP’s team included Managing Partner Nikolay Bebov, Partner Damyan Leshev, and Senior Associates Martina Dimitrova and Petar Ivanov.

In December 2021 the Bulgarian Parliament adopted a moratorium on electricity, water supply and heating prices on the regulated market. The moratorium was imposed due to the record high electricity prices on the Independent Bulgarian Electricity Exchange (“IBEX“) and the expected adjustments in the prices on the regulated market applicable to household customers. The Bulgarian Energy and Water Regulatory Commission (“Regulator“) has been prevented from taking any action regarding these price increases until 31 March 2022 by virtue of the moratorium.

Support for renewables suspended

The Regulator addressed the electricity price issue by adopting a decision on the premium payments received by renewable energy producers with an installed capacity of 500kW and above. The premiums serve as compensation to the producers for the difference between the repealed preferential feed-in tariffs and the price at which the electricity is sold on the free market. Considering that the electricity prices at IBEX reached record levels and exceeded the preferential feed-in tariffs, the Regulator decided to update the forecast market prices which determine the premium payments before the expiry of the current regulatory period (1 July 2021 – 30 June 2022). As per the new decision, most of the premiums have negative values and therefore the renewable energy producers will not get any premiums from 1 January 2022 until the end of the current regulatory period – 30 June 2022.

Legal implications

Good intentions aside, the renewable energy sector is facing a challenge because most of the contracts for sale on the free market are concluded for the same one-year period as the regulatory period. The contracts are generally concluded at fixed prices for the entire one-year regulatory period, guaranteeing that they will get the forecast market prices, which together with the premium will secure the receipt of the initial feed-in tariff. Further, a lot of RES producers have hedged their risk, which is also linked to the forecast market price, the premium and the one-year regulatory period. To benefit from the current higher market prices, many producers will have to renegotiate price adjustments with their buyers. However, if the respective contracts are not flexible, the producers may suffer from a significant drop in revenue. The market participants expected that the moratorium from December 2021 would also cover the forecast market prices and the premiums set by the Regulator, but the latter has a different view. The Regulator’s decision is expected to be appealed given the potential impact on the economic interests of investors.

By Stefana Tsekova, Local Partner, and Dimitar Kairakov, Associate, Schoenherr

Komarevski, Dimitrov & Partners has advised the Eurolease Group on its acquisition of Mogo Bulgaria.

According to KDP, “since the beginning of December 2021, the Eurolease Group has become the sole owner of the capital of Mogo Bulgaria, after acquiring 600,000 shares in its fintech competitor offering lease-based vehicle finance and consumer finance. The transaction was approved by the Bulgarian Commission for Protection of Competition at the end of October 2021.”

The Eurolease Group operates in Bulgaria and North Macedonia and includes companies providing financial and operating car leasing, sales of used cars, and car rental services under the Avis and Budget brands. 

KDP’s team was led by Partner Venelin Dimitrov and Attorney Iva Georgieva.

The first regular government formed after three extraordinary parliamentary elections, with pending reforms on the horizon, are a source of moderate optimism in Bulgaria, according to Djingov, Gouginski, Kyutchukov & Velichkov Partner Violetta Kunze.

“In Bulgaria, a new government was approved this Monday (December 13, 2021),” Kunze begins. “This year, we experienced three extraordinary parliamentary elections and we now have the first regular government since March. The new parliamentary majority formed a centrist-led coalition of political parties claiming to pursue changes in Bulgarian politics.”

According to Kunze, one of the most visible and promising trends is the increased involvement of the younger generation in politics. “Issues, such as transparency, zero tolerance for corruption, green energy transition, and reforms in key sectors are more actively represented on their political agenda,” she notes. “In addition, the government in power is backed by the parliamentary majority proclaiming democratic values, rule of law, and the EU principles, and we are looking forward to seeing how it develops.”

“In the recent past, the country witnessed high levels of uncertainty due to pandemic-related instability, as well as issues such as hiking energy prices and problems in the supply chain,” Kunze says. “The appointment of the new government has led to a cautious optimism for many considering that the coalition parties are composed of groups of people focusing on reforms specific to the Bulgarian context, who are willing to turn good ideas into policy.”

As for the legislative updates, Kunze notes that different reforms can be expected in the nearest future. “For lawyers, the most important reforms are related to the judicial system, tackling corruption, reinstating the rule of law, mainstreaming compliance issues, etc. Bulgaria is also lagging behind the implementation of the key EU legislation. For instance, the Bulgarian parliament has not yet managed to adopt the law implementing the whistleblowing directive,” she adds. “We expect the government to undertake the necessary political decision and the parliament to adopt the legislative framework for further enhancing the e-government and digitalization of the economy.”

As for the existing legislative updates, Kunze highlights that a new Law on the provision of digital content and digital services and for the sale of goods is entering into force on January 1, 2022, transposing EU Directive 2019/770 and EU Directive 2019/771 – part of the EU strategy to create a single digital market.

“At the same time, the government also pledges to focus on improving the business environment, attracting foreign direct investment, and increasing productivity through digitalization and institutional reforms. We are all looking forward to seeing how these trends continue,” she concludes.

Tsvetkova Bebov & Partners has advised TBI Bank on “the first-ever regulatory T2 bond issuance on the Bulgarian public capital markets.

“The first EUR 10 million tranche of T2 bonds (out of a total of up to EUR 30 million) “was successfully placed in July 2021 to a large number of institutional investors and was significantly oversubscribed,” according to TBP. The Bulgarian National Bank approved the T2 status of the bonds in early December 2021, and the T2 bonds are trading on the Bulgarian Stock Exchange.

According to the firm, headquartered in Sofia, TBI Bank “is one of the fastest growing online lenders to individuals and SMEs in Bulgaria and Romania, and is now focused on becoming a next-generation digital lender to service customers in other markets as well.”

TBP’s team was co-led by Managing Partner Nikolay Bebov and Partner Damyan Leshev and included Counsel Maria Karacholova and Senior Associate Petar Ivanov.

Tsvetkova Bebov Komarevski has changed its name to Tsvetkova Bebov & Partners, following the departure of Ilya Komarevski. Aside from the new name, the firm announced that Victoria Tzonkova and Damyan Leshev were elevated to Partner, while Eleonora Mateina was appointed to Head of Competition and Pharmaceuticals. 

Tzonkova has been with the firm since September 2011. Prior to that, she was an Attorney-at-Law with McGregor & Partners, between 2008 and 2011, and an Attorney-at-Law with DGKV, between 2004 and 2008. According to the firm, she specializes in litigation, energy law, corporate/M&A, and labor law.

Leshev, who is the Co-Head of the Financial Services Law Group, first joined the firm in May 2015, as a Managing Associate. Before that, he was a Senior Legal Advisor with Karoll, between 2014 and 2015, and a Legal Advisor with Postbank (Eurobank Bulgaria), between 2011 and 2014.

The new head of the Competition and Pharmaceuticals departments, Mateina, has been with the team since February 2015, when she joined from Georgiev, Roussinov & Co.

Kinstellar has advised the Black Sea Trade and Development Bank on its “Framework Agreement for Pandemic Crisis Response Programme” that will be implemented together with the National Guarantee Fund.

According to Kinstellar, “the risk-sharing portfolio guarantee program is expected to promote up to EUR 75 million of new financing and help about 250 local SMEs to offset the negative impact of COVID-19 in Bulgaria. The program will offer guarantees to Bulgarian commercial banks, facilitating access to finance and improving financing conditions for final borrowers.”

Kinstellar’s team was led by Counsel Svilen Issaev and included Partner Kvetoslav Krejci and Associate Nikolay Gergov. 

DPC has advised DHH S.p.A on the acquisition of the Bulgarian tech company Evolink AD.

DHH is an Italy-based company investing in hosting providers in Central and Eastern Europe.

According to DPC, “the deal for 60% of the shares of one of the largest Infrastructure-as-a-service providers in Bulgaria was closed at the end of November for EUR 2.45 million, with an option for a full acquisition in 2025.”

DPC’s team included Partner Zoya Todorova and Associates Polya Dimitrova and Ana-Mari Eremieva.

Editor’s Note: After this article was published, DPC informed CEE Legal Matters that all Evolink shareholders, including Biser Tsonev and Svetoslav Hristov as well as companies Index Bulgaria, Topica-Expert, and Devora-Bulgaria, acted as the sellers. 

Former Tsvetkova Bebov Komarevski Partners Ilya Komarevski and Venelin Dimitrov have established a new firm in Sofia – Komarevski Dimitrov & Partners.

Komarevski had been with his previous firm since 2004.

Dimitrov had been with TBK since March 2008, when he joined as a Senior Associate. He was promoted to Managing Associate in 2014, Senior Managing Associate in 2016, and Partner in 2018. Prior to TBK, he worked as a Senior Legal Counsel with Landwell Bulgaria and as an Associate with Bratoev & Konov.

Iva Georgieva, Mileslava Bogdanova-Misheva, and Aleksandar Aleksandrov complete the current KDP roster as Senior Associates, with the team “currently expanding further to meet the demand of their existing and new corporate clients.”

According to the firm, its “strategic goal is building a strong fully-fledged independent business law firm that cooperates on a non-exclusive basis with top international law firms and offers premium legal solutions to reputable clients.”

Georgiev, Todorov & Co. has successfully defended Port of Burgas before Bulgaria’s Supreme Administrative Court against electricity distribution operators Elektrorazpredelenie Yug and EVN Bulgaria Elektrosnabdyavane.

The case was brought against Port of Burgas in its role of commercial grid consumer by an electricity distribution operator.

According to the firm, “the Supreme Administrative Court fully upheld the previous decision of the Sofia City Administrative Court that consumers connected to the electricity network at medium voltage level can choose whether to be connected to the electricity distribution or transmission system operator, subject to the relevant technical conditions. The decision of the Supreme Administrative Court complies with European Union and national law, as well as with the instructions given by the Court of Justice of the European Union.”

“In its decision, the Court concluded that ‘the consumer Port of Burgas should be considered a consumer directly to the electricity transmission network, as it is practically connected to a medium voltage system, which is part of an electrical substation the scope of activity of the transmission network,’” the firm informed.

The Georgiev, Todorov & Co. team included Partners Miglena Peneva and Mariya Derelieva and Senior Associate Ivan Tserovski.