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Articles & publications
27.05.2010
Board of Directors of Svyazinvest to discuss transaction with AFK Sistema at AGM on June 30Interfax
The Board of Directors of Svyazinvest approved at a meeting held on Thursday the agenda of its annual general shareholders meeting, a source acquainted with the board’s decision told Interfax.
The company’s shareholders meeting is scheduled for June 30 and the record date is May 27.
The agenda of the meeting includes, among other things, the issue of approving an exchange transaction between Svyazinvest and Sistema-Inventure (a subsidiary of AFK Sistema) (RTS: AFKS).
The subject of the agreement is the exchange of a 28% stake of common shares (23.3% of equity) of Moscow City Telephone Network (RTS: MGTS) (MGTS) which is owned by Svyazinvest, for a 50% stake of common shares in Sky Link. The other 50% of Sky Link is owned by the operator’s subsidiary MS-Direkt. The above-mentioned stake in MGTS was appraised at RUR 9.7 bln by Ernst & Young, while 100% of Sky Link is estimated at RUR 9.4 bln. Sistema is expected to make up the difference to Svyazinvest in cash.
As an interested party, Comstar-UTS, which is controlled by Sistema, is not allowed to vote on the issue of approving the agreement.
Swapping a stake in MGTS for Sky Link is one of the conditions for Rostelecom to execute a transaction aimed at the buyback of a 25% + one share stake in Svyazinvest from Comstar-UTS.
The agreement between Rostelecom and Comstar provides that Svyazinvest and Sistema Inventure enter into an exchange agreement no later than August 2.
Aside from a 100% stake in Sky Link, Svyazinvest also acquires Sistema’s right of claim against the operator. The state holding will also receive from Sistema Telecom the right of claim, including liabilities on promissory notes against the subsidiaries of Sky Link: Uralvestcom, Apex and Kaliningrad Mobile Networks.
As reported earlier, Sistema consolidated Sky Link’s debt to shareholders by buying out the operator’s liabilities to its former second co-owner – Jeffery Galmond’s RTDC holding.
In line with the transaction, AFK Sistema bought from RTK-Leasing (RTS: RTKL) a Sky Link promissory note worth RUR 1.4 bln. According to earlier reports, the debt was purchased with a 40% discount.
In April, Sistema raised its beneficial stake in Sky Link to 100% as a result of which MS-Direkt bought back a 50% stake in RTDC in the operator.
As of the end of 2009, Sky Link’s debt amounted to about $360 mln, more than half of which fell to the liabilities of both its shareholders.
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