Sistema Founders Ready to Pay
Vladimir Evtushenkov, the main shareholder in AFK Sistema, its president Alexander Goncharuk and nine private shareholders in the corporation have announced that they are voluntarily taking on risks of their cellular subsidiary Mobile Telesystems of $170 million. MTS may have to pay that money on an option on 49 percent of the stock in the Kyrgyz Bitel cellular operator, which MTS lost control over last year.
MTS reported late last night that it had been notice of payment from the Luxembourg company Nomihold Securities Inc., which owns 49 percent of Tarino Limited. MTS bought 51 percent of Tarino at the beginning of December of last year from the Kazakh company Alliance Capital, which is the owner of Nomihold Securities. At that time, Tarino Limited owned 100 percent of Bitel through three offshore companies. MTS considered the acquisition plan dependable at the time and bought 51 percent of Tarino for $150 million, concluding an option deal on the remaining 49 percent for a year for $170 million. However, MTS was unable to take control of the Kyrgyz cellular operator. ZAO Rezervspetsmet, which is thought on the market to e affiliated with Alfa Group, declared its right to the company. At the end of last year, after a number of court procedures and law enforcement operations at the Bitel office, Rezervspetsmet received control over Bitel. MTS has until December 9 to take advantage of its option. Otherwise, a source close to Alliance Capital informs Kommersant, a suit against MTS “will be filed in court immediately.”
Press releases from AFK Sistema and MTS say that AFK Sistema shareholders “will cooperate with MTS in protecting its rights, but if an appeals decision is finally made against OAO MTS, AFK Sistema shareholders have decided to return OAO MTS the corresponding losses in the size of $170 million.” Eleven shareholders are prepared to produce that money. They are company founder and main shareholder Vladimir Evtushenko, company president Alexander Goncharuk, members of the board of directors Evgeny Novitsky, Alexander Gorbatovsky, Alexander Leiviman, Dmitry Zubov and Vyacheslav Kopyev, members of the boards of Sistema subsidiaries Viktor Bolshakov and Vyacheslav Inozemtsev and senior vice presidents of Sistema Alexey Buyanov and Sergey Drozdov. Sistema has specified that those shareholders will sell various quantities of stock in the corporation.
“The decision, of course, was difficult, but we followed two arguments. We are confident that we are right, first. Second, we want to show the investment community that we will stand up for what is right by risking out own money,” commented Zubov.
Vladimir Evtushenko is the largest shareholder in AFK Sistema with 62.1 percent of the shares in the corporation. Other co-owners are Sistema executives, among them Alexander Leiviman (3.4%), Evgeny Novitsky (3%), Alexander Gorbatovsky (2.4%), Alexander Goncharuk (2%), Dmitry Zubov (1.3%), Alexey Buyanov (0.2%), Sergey Drozdov (0.2%) and Vyacheslav Kopyev (0.1%). The remaining minority shareholders own 6.1 percent of the stock. Since February 2005, 19 percent of the Sistema stock has been quoted on the London Stock Exchange. The company's capitalization is about $11.77 billion.
Telecommunications analysts assess the executives' decision variously. “That can be interpreted as a step to increase investor confidence,” concedes Yuly Matevosov, director of the analytic department of Dresdner Bank. “MTS has had many problems with Bitel and now the shareholders of AFK Sistema are showing that they will bear responsibility for all possible problems. That was a successful image move.” The head of the analytic department of Antanta Capital notes, however, that he has never heard of such a practice. “I am sure that it won't be possible to give out that money without problems. It is against tax law and bookkeeping practices, in particular. That is to say that it is impossible simply to put money in a company. It has to perform some service.”
Lawyers express doubt about the legality of such an operation. “You can't just give money,” Yuly Tai of the Bartolius legal bureau said. “You have to think up a legal basis and conclude some sort of contract. Risks arise based on taxes, since tax bodies always pay special attention to deals between interdependent parties, all the more when it is forgivable loans.”
Ivan Cheberko, Olga Pleshanova
All the Article in Russian as of Nov. 28, 2006
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