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Articles & publications
17.03.2010
Discount for swapping RTO prefs for common shares of Rostelecom could be 15-25% - YurchenkoInterfax
The discount for converting the preferred shares of regional telecom operators (RTOs) into the common shares of Rostelecom (RTS: RTKM) could be as much as 15-25%, according to the Director General of Svyazinvest holding Evgeny Yurchenko.
“Right now we’re discussing the range of 15-25%”, he said in an interview with Kommersant.
Mr. Yurchenko went on to say that in line with the merger, Svyazinvest’s consultants have advised swapping all prefers expect those of Rostelecom for the common shares of the merged company with a discount consistent with the market.
“The level of the discount is the same for all RTOs, the holding’s CEO said.
Mr. Yurchenko acknowledged that “some minorities have spoken out against the discount”. “But we cannot agree with them, since this would not be fair to the holders of common shares, which carry much broader rights”, he said.
According to Evgeny Yurchenko, Ernst & Young, which is conducting an appraisal of Svyazinvest’s companies and calculating the ratios for swapping RTO shares into those of Rostelecom, has already forwarded indicative valuations to the consultant banks to receive their opinions, but the final ratios will be calculated on the basis of 2009 RAS reporting data, which are now being consolidated. The swap ratio calculation procedure is based on two appraisal method – the discounted cash flow method (DCF) and the market quote method, which is underpinned by the average value of common shares over a certain length of time during the past year.
The process of discussing the swap ratios at the boards of directors of the subsidiaries of Svyazinvest will begin at the board of directors meeting of Far East Telecom (RTS: ESPK), which is tentatively scheduled to be held on April 26. “An agreement on merger conditions for folding one legal entity into another will be submitted to the board and then to the general shareholders meeting of each RTO. It will contain two ratios which illustrate the number of common and preferred shares in units, which can be exchanged for one common share in Rostelecom”, Mr. Yurchenko pointed out.
As reported earlier, the decision on reorganization should be approved by third quarters of the votes cast at a shareholders meeting, including the holders of preferred shares 9Svyazinvest’s stake in RTOs including prefs is 38%).
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