British investment fund Utilico Emerging Markets Trust Plc is the new significant minority shareholder in Telelink Business Services Group AD (TBS Group), as revealed in the fund’s public notification to the company, stating the acquisition of 5.8% of TBS Group’s capital within the second tranche of the company’s public offering on September 21. Earlier, within the first tranche in June, the fund acquired other 4.2% of TBS Group’s capital. With this, the fund’s total interest in the company’s capital reached 10% of the voting shares, which makes it not only the first foreign institutional investor in the company, but also its largest minority shareholder.
TBS Group launched the second tranche of the offering on September 21 2020, when the three Selling shareholders Lyubomir Minchev, Ivo Evgeniev and Spas Shopov placed on the market 6.14% of the company’s capital, or a total of 767 513 shares, in accordance with the Updated procedure for the sale of the company’s shares from September 16, 2020. All shares were purchased on the very first day of the offering, which was scheduled to end on September 25, 2020. With this regard, the Selling shareholders made the decision not to offer new lots of shares on the market until the start of a new tranche, as provided by the Updated procedure.
“Our success in earning the trust of many investors, including one of Utilico’s class, as well as local pension and mutual funds, is a recognition of our efforts and an incentive to keep going”, said group CEO Ivan Zhitiyanov. “We are aware of the responsibility that entails, and we are determined to justify the investors’ trust”, added Mr. Zhitiyanov.
“On both the first and second tranche, TBS Group enjoyed significant investor interest. The company also succeeded in attracting a big foreign investor, which was something we had not seen on the BSE in the recent years”, added Radoslava Maslarska, Chairperson of the Board of Directors of ELANA Trading – TBS Group’s offering manager. “We hope that this will give the market the kind of fresh boost it certainly needs”.
With the placement of the new 6.14%, the total stake in TBS Group sold on the BSE reached 14% of the company’s capital. The shares were acquired by more than 250 local and foreign legal entities and individuals. The offering was carried out in two tranches, one in June 2020 and one in September 2020, at prices of BGN 7.60 and BGN 11.10 per share respectively, in accordance with the sale procedure pre-approved and disclosed by the Selling shareholders. Meanwhile, the company‘s management proposed and the shareholders approved dividends in the total gross amount of BGN 0.496 per share.
Further to the two successful tranches, the Selling shareholders maintain their plans to increase the free float up to 30% of the company’s share capital in case there is significant investor interest. For that purpose, they may offer new lots of shares until the end of 2021 in tranches that will be announced beforehand. The price of those lots will continue to be determined as 8.5 x 12-month EBITDA minus the net debt, but not lower than 11.10 BGN per share.
In line with the above terms, key retention commitments under the Agreement restricting the disposal of shares (Lockup Agreement) in force among the pre-listing shareholders of TBS Group have also been extended. According to the Agreement’s update from September 16th, 2020, TBS Group CEO Ivan Zhitiyanov shall not sell shares out of its initial stake by the end of 2021, while Lyubomir Minchev, Ivo Evgeniev and Spas Shopov shall not sell shares outside the quotas determined as a part of the total offering size of 30% by the end of 2021. Lyubomir Minchev has also extended his commitment to maintain a majority stake in the company of at least 51% up until the end of 2022. The commitments of three other initial shareholders, in respect of their combined initial stake of 3%, not to sell shares by the end of 2020 have also been maintained.
Share buyback and Incentive plan
“One of our goals when going public was to create conditions for the broadest possible range of our employees to become shareholders. For this purpose, we are developing a Share Incentive Program for Employees, whose 2020 framework had already been approved by the shareholders and which we hope we will be able to expand in the following years”, Zhitiyanov added. The framework allows for the distribution of up to 1.35% of the company’s capital through various approaches with the aim to reach maximum motivation among employees about the current as well as the future results of TBS Group.
To achieve that, the company executes a share buyback program, under which a total of 7 775 voting shares had already been repurchased. The share buyback, which was approved by the TBS Group General Meeting of Shareholders on June 30, 2020, allows for buying back up to 3% of the company’s capital until the end of 2020 at a price range of 7.40 – 11.00 BGN per share.