Articles & publications
04.08.2010
Lost block of shares: DIA to turn its stake over in Rostelecom to State Property Management AgencyRBC Daily
Elizaveta Sergina, Elena Zlenko
Deposit Insurance Agency (DIA) is considering the possibility of transferring its 29.9% stake in Rostelecom to the State Property Management Agency. DIA has long said it intends to sell this stake for the purchase price, which is twice as much as their market value. However, since neither Svyazinvest nor Rostelecom intend to buy back the stake, the state corporation intends to exercise its last possible option.
DIA was reported to be studying whether to assign its 29.9% stake in Rostelecom, which was received during the financial rehabilitation of KIT Finance, to the State Property Management Agency (Rosimushestvo), RBC Daily was told by a source close to one of the parties to the transaction.
According to another source familiar with DIA’s plans, the State Property Management Agency could pay for this sake using funds that were earlier contributed to DIA. The State Property Management Agency expects this contribution to be returned over the next few years. DIA and the State Property Management Agency declined to comment on this issue.
DIA bought back a 29.99% stake in Rostelecom from KIT Finance bank as part of its financial rehabilitation, having paid RUR 50.28 bln (RUR 230 per share). The agency had planned to sell the stake at a later time for not less that the purchase price. In addition, a 9.8% stake in Rostelecom went to the Development Bank, and Rostelecom later reached an agreement to buy back this stake within three years. The assumption was that the stake would be bought back from DIA from Svyazinvest or its successor, Rostelecom. However, the parties failed to reach an agreement on the terms of the deal at a meeting held at the Finance Ministry in July, media reports said.
Yesterday, Rostelecom’s shares closed at RUR 111.1. Even including the consolidation of Svyazinvest’s assets (in the course of reorganization of the holding seven regional telecom operators are to be folded into Rostelecom) – RBC Daily – the company’s shares would not be worth what DIA paid for then”, Uralsib analyst Konstantin Belov believes.
According to RBC Daily’s data, the merger of Svyazinvest companies on the basis of Rostelecom could cost at least RUR 50 bln. About RUR 38 bln in debt obligations could be demanded for repayment, according to estimates by the holding’s consultants, and another RUR 15 bln could be required to pay back no more than 10% of net assets). Svyazinvest’s consolidated net debt stands at RUR 113.9 bln, based on its official documents.
Svyazinvest cannot afford such an expensive deal, and Rostelecom cannot buy back the shares, since they would become treasury shares after this. The only logical way out was for DIA to sell this block of shares”, according to Gazprombank analyst Anna Kurbatova. “The fact that the company will not be able to buy back these shares is actually good news, since the operator will not have to pay higher than market price”, Mr. Belov went on to say.
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