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Articles & publications
09.06.2010
AFK Sistema to pay Svyazinvest an additional RUR 450 mln in swapping Sky Link for a 23% stake in MGTSInterfax
AFK Sistema (RTS: AFKS) is to pay Svyazinvest RUR 450 mln under a transaction involving the exchange of 50% of Sky Link’s common shares for 28% of the common shares (23.3% of its capital) in Moscow City Telephone Network (RTS: MGTS) (MGTS).
According to the final appraisal of assets, which was prepared by Ernst & Young and approved by the Board of Directors of Svyazivest, the value of the state holding’s stake in MGTS amounts to RUR 9.75 bln, while Sky Link’s block of shares is worth RUR 9.3 bln.
On the basis of this estimate, AFK’s subsidiary – Sistema-Inventure – will be required to pay Svyazinvest the difference between the value of the swapped shares, according to a statement made by Svyazinvest.
According to earlier reports, according to the preliminary appraisal, the value of the holding’s stake in MGTS is equal to RUR 9.7 bln, while the price of Sky Link is RUR 9.4 bln. The difference in the price of assets thus amounts to RUR 300 mln.
The Board of Directors of Svyazinvest was earlier reported to have advised its shareholders to approve the swap deal with Sistema-Inventure at its annual general shareholders meeting.
The subject of the agreement is the exchange of a 28% stake of common shares (23.3% of its capital) of MGTS for a 50% equity stake in Sky Link. The other 50% of the operator is owned by Sky Link’s wholly-owned subsidiary MS-Direkt.
Comstar-UTS, controlled by Sistema, which owns 25% + 1 share stake in Svyazinvest, is not allowed to vote on the issue of approving the agreement, as an interested party.
“By entering into this transaction, Svyazinvest will acquire 100% control over Sky Link, a major wireless operator. The transaction will give the Svyazinvest Group access to the most developed mobile datacom network in Russia. In addition, Sky Link has points of presence in Moscow and the Moscow region, which will enable the Svyazinvest Group of companies to enter the Moscow cellular market”, according to a statement issued by Svyazinvest.
Swapping stakes in MGTS and Sky Link is one of the key conditions for executing a transaction whereby Rostelecom (RTS: RTKM) (a subsidiary of Svyazinvest) is to buy back Comstar-UTS’s blocking stake in Svyazinvest.
The agreement between Rostelecom and Comstar provides for Svyazinvest and Sistema-Inventure to enter into a swap agreement no later than August 2.
Aside from a 100% stake in Sky Link, Svyazinvest also acquires Sistema’s rights of claim against the operator. In addition, the state holding will receive rights of claim from Sistema Telecom, including outstanding promissory notes against the subsidiaries of Sky Link, i.e. Uralvestcom, Apex, and Kalininskie Mobile Networks.
As reported earlier, Sistema consolidated Sky Link’s debt to shareholders by taking over the operator’s liabilities to its former second co-owner – Jeffery Galdmond’s RTDC holding.
In line with the transaction, AFK bought back from RTK-Leasing (RTS: RTKL) Sky Link’s promissory notes worth RUR 1.4 bln. As reported earlier, the debt was acquired at a 40% discount.
In April, Sistema boosted its beneficiary stake in Sky Link to 200% as a result of which MS-Direkt bought back RTDC’s 50% stake in the operator.
As of year-end 2009, Sky Link’s debt amounted to $360 mln, more than half of which fell to liabilities to both shareholders.
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