Category: Bulgaria

DGKV has advised Fund Manager of Financial Instruments in Bulgaria EAD on the structuring and launching of a EUR 100 million public procurement procedure to select financial intermediaries for equity and quasi-equity investments in Bulgarian seed and start-up companies.

According to DGKV, “this is the first instrument under Operational Programme Innovations and Competitiveness 2014-2020 and the Seed/Acceleration and Start-Up Fund and aims to relocate financial resources through funds (Seed/Acceleration Fund I, Seed/Acceleration Fund II, and Start-Up Fund) to support and enhance the entrepreneurial ecosystem in Bulgaria. The purpose of the public procurement procedure is to select fund managers for the three funds which shall be required to complement the funding resources available. It is expected that the investments shall reach the target companies by the middle of next year. The investment period shall be five years, with a total time horizon of 10 years for the three funds, with an option to extend their life for another two one-year periods.”

DGKV was chosen to assist the Fund Manager of Financial Instruments in Bulgaria EAD1 (which it refers to as the “Fund of Funds”) in a selection procedure that took place in early 2017. According to the fir, “our work on the project included preparation of an operational agreement (public procurement contracts) for implementation of the Seed/Acceleration and Start-Up Fund and preparation of legal opinion on the drafts of public procurement documents prepared by the Fund of Funds for conducting a procedure for the selection of financial intermediaries for the implementation of financial instruments financed by Operational Programme Innovations and Competitiveness 2014-2020. DGKV shall further assist the Fund of Funds on the selection of financial intermediaries for implementation of financial instruments financed by the Operational Programmes Innovation and Competitiveness, Regions for Growth and Environment 2014-2020. The team has already accrued significant experience after being instructed by the European Investment Bank to handle the negotiations over the operational agreement with the financial intermediaries initiative as well as on the structuring of relationship between the management authorities of Republic of Bulgaria and the newly set up Funds of Funds entrusted with the management of all EU financial instruments resources to be made available to Republic Bulgaria during the 2014-2020 programming period.”

DGKV’s team on the project is led by Partner Georgi Tzvetkov and includes Senior Associates Gergana Monovska and Anton Krustev and Associates Lora Aleksandrova and Tsvetelina Bayraktarova.  

CMS has successfully defended renewable energy client Astronergy (part of the Chinese energy group Chint) against a commercial claim brought by a former developer over the acquisition of the photovoltaic plant Cherveniakovo-4MWp in Bulgaria.

According to CMS, in its final ruling on September 11, 2017, the Supreme Court of Cassation of Bulgaria denied all the claims of the former developer of the Cherveniakovo PV plant against SP02 EOOD, the SPV owned by Astronergy Solar Bulgaria Ltd.  CMS stated that the Court’s judgment “marks the end of a commercial dispute that dragged through three judicial instances for over four years and allows [Astronergy] to continue its successful expansion across CEE, while recovering all its litigation expenses.”

According to CMS, “since its foundation in 2006, Astronergy expanded its production capacity almost ten times, from 25MW to 2500MW, and it is one of the biggest solar project developers in China. Chint Electric and Astronergy are CMS clients since 2012 in Bulgaria, Romania, Spain, Czech Republic and other jurisdictions.”

The CMS Sofia team was led by client relationship Partner Kostadin Sirleshtov and Partner Assen Georgiev with support from Senior Associates Iliyan Petrov, Maria Lazarova, Alexander Rangelov, and Jenia Dimitrova, Associates Deyan Draguiev, Rosen Ivanov, Elena Yordanova, Borislava Pokrass, Denitsa Dudevska, Raya Maneva, Dimitar Dimitrov, and Borislava Piperkova.

DGKV’s real estate team has advised NEPI Rockcastle on the September 21, 2017 acquisition by its subsidiary NEPI Project Two EOOD of Bulfeld EOOD — the owner of the Paradise Center shopping center in Sofia — from Bul Dom OOD. Penkov, Markov & Partners advised the sellers on the deal, which remains subject to approval of the Bulgarian competition watchdog.

In an announcement to the Johannesburg Stock Exchange, NEPI stated that the EUR 252.9 million purchase — reportedly the highest price ever paid for real estate in Bulgaria — was funded by its cash resources and debt facilities, combined with sale of listed securities. 

The acquisition represents the second investment in Bulgaria by NEPI this year, following its acquisition of the Serdika Center shopping center in Sofia earlier this summer. With a gross floor area of more than 208,000 square meters, Paradise Center is one of the largest retail centers in the country. Opened in 2013 and benefiting from a major conference facility and with direct access to a newly-built metro line, Paradise Center has an annual footfall in excess of 10 million visitors. 

The DGKV team was led by Partner Stephan Kyutchukov and Senior Associate Valentin Bojilov and included Senior Associates Nikolina Stefanova, Kaloyan Krumov, Maya Mircheva ,and Yassen Spassov, and Associates Alexander Shpatov, Vladislav Antonov, Lora Aleksandrova, Martin Dimitrov, Silviya Apostolova, Tsvetelina Bayraktarova, Kamen Gogov, Patricia Cherkezova, and Simeon Vachev. 

The Penkov, Markov & Partners team was led by Partner Milena Gaidarska and included Attorneys Atanas Valov, Radost Georgieva, Maria Pashalieva, and Koicho Marinov.

Editor’s Note: On December 14, 2017, Penkov, Markov & Partners informed CEE Legal Matters that Bulgaria’s Commission for the Protection of Competition had authorized the concentration, and that “a final agreement for the transfer of 100% of the capital of Bulfeld Ltd. — the company which owns the Paradise Center — was signed on the 1st of December.”

Image Source: paradise-center.com

Kinstellar’s Sofia antitrust team has advised the Linxens Group on the merger filing leading to the eventual approval by the Bulgarian Commission on Protection of Competition of its acquisition of the SIT Division of the Smartrac Group and on the antitrust aspects of the implementation of the deal.

Kinstellar describes the Linxens Group as “a global leader in the design and manufacture of smart card microconnectors, inlays, and led light sources,” and says that the Commission’s approval “cleared the way to closing a transaction that would combine Linxen’s and Smartrac’s businesses.”

The Kinstellar team was led by Of Counsel Dessislava Fessenko, supported by Junior Associate Kamen Chanov.

Bulgaria’s Dimitrov, Petrov & Co. has joined the SELA law firm alliance.

SELA (the South East Legal Alliance) now has members in seven jurisdictions, including Apostolska & Aleksandrovski in Macedonia, Bojovic & Partners of Serbia/Montenegro, Dimitrijevic & Partners in Bosnia and Herzegovina, Kirm Perpar in Slovenia, Zuric i Partneri in Croatia.

Kambourov & Partners has successfully represented Iberdrola Inmobilaria before the the European Court of Justice in a case involving the general rules for deduction of VAT credit in cases of investment in public infrastructure.

According to Kambourov & Partners, “the decision is of significant importance not only for the client, but also for the general investment climate in Bulgaria. The ECJ accepted that a taxable person has the right to deduct input value added tax in the context of its economic activity, even when a third party enjoys the results of the services free of charge.”

The Kambourov & Partners team was led by Partner Todor Todorov, supported by Associate Zahari Naumov.

Kinstellar has advised a consortium consisting of Hungary’s OTP Bank PLC, its Bulgarian subsidiary, DSK Bank, and Eurobank Bulgaria on a EUR 133 million senior loan facility to Business Park Sofia to be used for debt restructuring and the construction of a new office building.

OTP Bank PLC is acting as the facility agent, and DSK Bank EAD is the account bank for the transaction.

According to Kinstellar, Business Park Sofia is “the largest business park in CEE and the first of its kind in Bulgaria.” The firm reports that its work “included comprehensive due diligence, including into the corporate status and history of the operating companies, a detailed review of the title history of the land plots and the 14 buildings located in the Business Park, analysis of zoning and planning issues, and the review and analysis of lease agreements, existing financial arrangements and other material contracts. Our involvement also included drafting and negotiating the complex facilities agreement as well as the security package for the financing and completion of the funding.”

The Kinstellar team consisted of Counsel Antonia Mavrova, Managing Associates Svilen Issaev and Mladen Minev, Senior Associate Borislav Atanasov, and Associates Vanya Evtimova and Kristina Lyubenova.

Kinstellar did not reply to an inquiry about counsel for the borrowers.

Image Source: businesspark-sofia.com

DGKV has advised AP Investments AD on the sale of 50% of Mall Galleria Varna to the Serbian-based Delta Real Estate DOO and the Cyprus-based Astatine Holdings Limited. The buyers were advised by Deloitte Legal on the deal, which closed on August 18, 2017. The financial terms of the transaction were not disclosed. 

According to DGKV, “Tthe total investment amount for the design and construction of Mall Galleria Varna is EUR 77 million. The building is completed, but due to the highly competitive retail market in Varna the mall is not opened yet. It has three underground and three above ground floors with a total floor area of 110,000 square meters.”

The DGKV team advising AP Investments was led by Partner Georgi Tzvetkov, supported by Senior Associates Kaloyan Krumov, Valentin Bojilov, Dessislava Iordanova, and Krassimir Stephanov, and Associates Ivan Punev, Silviya Apostolova, and Vladislav Antonov.

The Deloitte Legal team was led by Partner Reneta Petkova and included Managers Kaloyan Yordanov and Zvezdelina Filova, Associates Severina Miteva and Konstantin Ivanov, and Trainee Hristo Milushev.

Image Source: mallvarna.bg

“Lawyers feel the pulse of the economy,” says George Dimitrov, the Managing Partner of Bulgaria’s Dimitrov, Petrov & Co. law firm, “so if lawyers have work that means things are going well in business.” Accordingly, Dimitrov’s assertion about his firm that, “we have lots of work and we’re expanding our team” can only be a good sign for Bulgaria.

Indeed, according to Dimitrov, “at present we have lots of work in several directions, including IT, privacy, and communications law, where we help companies deal with regulations like the GDPR and the Network Information Security Directive — so basically helping companies prepare and adapt to all the requirements set forth in Europe for personal data protection and cyber security.” Dimitrov notes that “the EU has created new laws in this area that seriously impact businesses, and all of those businesses need to make the effort to re-engineer their internal processes.”

Dimitrov is asked whether companies in Bulgaria are, at this point, sufficiently informed and aware of the upcoming May 2018 deadline for GDPR compliance. “It’s true that the impact is quite underestimated,” he says, “but it’s also true that the biggest companies on the market, like the banks, the utilities, and the insurance companies are well aware of what’s coming, and they’ve all started their preparations for it. These days I’d say even the smaller players are aware, more or less.”

Dimitrov says that he’s seeing increased M&A activity in the market as well, and “in the areas that we specialize in, we can see that companies in the pharmaceutical area and IT are facing lots of strong competition.” In addition, Dimitrov notes the significant amount of legal work are arising from the ongoing digitalization of industry. “A lot of companies see the need to become more digital to remain competitive,” he says, “so we have an increased number of requests for our IT, privacy, and communications team from all kinds of players. To transform a business and make it more digital means you have to go paperless and introduce technologies to optimize processes. For instance, one of our clients, a bank, who by far relied heavily on branches — now has both the technological ability and the legal framework for onboarding clients without even seeing them, completely remotely. Thus it needs to evolve, and to change internal policies, from the way it onboards clients, to providing more services completely digitally, completely remotely, and to change the ways the services are provided: opening bank accounts, applying for credits, providing banking details, etc.” As a result, Dimitrov says, there’s a significant amount of compliance work and regulatory work related to the process, “which is about 90% legal work.” He notes that clients aren’t the only ones dealing with this process, as “law firms also need to evolve as well.”

There’s no major Bulgarian legislation coming down the pike anytime soon, Dimitrov reports, beyond, “maybe the new concessions for the beaches, which will affect competition in the tourist sector.” Dimitrov says his firm advised the government on the draft law that was published on August 29th for public discussion, “so this is something that is upcoming, because tourism is one of the key pillars of economic growth in the country — so it’s very important.” According to Dimitrov, “if all goes well, once the National Assembly starts its new season in September, this will probably be the first law they consider, so by end of September or by mid-October we should have something ready to go.”