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Articles & publications
28.04.2010
IPA approves terms for reorganization of Svyazinvest, notes information leaks on swap ratiosInterfax
The Investor Protection Association (IPA) has recommended that the shareholders of regional telecommunications companies (RTOs) and Rostelecom (RTS: RTKM) vote for the reorganization of companies at the upcoming annual shareholders meetings.
The board of directors of IPA on Wednesday adopted a model for the reorganization of the Svyazinvest Group of companies by way of a merger with Rostelecom which corresponds to the interests of minority shareholders, according to statement issued by the association.
The results of appraisal of the shares of RTOs and Rostelecom to be used for the calculation of swap ratios were recognized as “acceptable” to minorities.
At the same time, IPA pointed out “defects in the organizational process of discussions with minority shareholders concerning the methodology used for the appraisal of the shares of RTOs and Rostelecom, which resulted in the public dissatisfaction of some minority shareholders concerning the results of the appraisal of Far East Telecom (RTS: ESPK).
In addition, IPA highlighted “instances involving the disclosure of information in the media on the conversion of share ratios and the lack of a proper reaction on the part of issuers”.
Earlier on Wednesday a meeting of the Steering Committee of Svyazinvest was held, at which the management of the holding, minority shareholders, representatives of consultants and the appraiser discussed the terms and conditions for converting the shares of RTOs into those of Rostelecom, Interfax was told by some of the persons that attended the meeting.
The executive director of the association Denis Kulikov told Interfax that the recommendations of IPA will also be addressed to the western investors of RTOs. The association traditionally works with RiskMetrics, an international company which issues recommendations to the minority shareholders of public companies regarding issues for voting at shareholder meetings.
The ratios used to convert RTO shares into those of Rostelecom and the price of shares bought back from minority shareholders that disagree with the reorganization were calculated by independent appraiser Ernst & Young. Investment bank Morgan Stanley confirmed the fairness opinion.
Decisions on the reorganization of RTOs should be approved by a three quarters majority of votes by those attending the shareholder meeting, including the holders of preferred shares (Svyazinvest’s stake in RTOs including prefs is equal to 38%).
Merger agreements on the terms and conditions of the merger with Rostelecom will be discussed at the annual shareholders meeting of each regional telecom operator. The merger agreement contains the conversion ratio for swapping common and preferred shares of RTOs and Rostelecom.
The first company whose board of directors is scheduled to review the merger agreement at its annual general shareholders meeting was Sibirtelecom (RTS: ENCO).
Incidentally, some minority shareholders of Far East Telecom could vote against the reorganization. Dissenting shareholders are attempting to garner 25% of the votes in order to block the merger with Rostelecom, according to Mikhail Kobischanov, former member of the board of directors of Far East Telecom and advisor for macroeconomic issues at Corporation FNDS.
A source close to the board of directors of the Far East operator told Interfax in an interview that the dissenting shareholders will manage to have the appraisal of Far East Telecom overturned. In order for this to happen, Ernst & Young would have to adjust the methodology used for all RTOs.
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