Rostelecom to cancel treasury stock amounting to 6.77% of shares
MOSCOW. March 6 (Interfax) - Rostelecom will cancel treasury stock amounting to 6.14% of ordinary and 13.7% of preferred shares.
The stock was purchased last year from shareholders who opposed the spinoff of mobile assets into CJSC RT-Mobile (for transfer to the joint venture with Tele2) at an extraordinary meeting on December 30, 2013.
According to Russia law, a company cannot keep treasury shares on its books for more than a year bore they have to be sold or canceled. Last year, Rostelecom sold its subsidiary Mobitel a treasury stake of 7.2% ordinary and 17.5% preferred shares, which were acquired when Rostelecom merged with Svyazinvest. A similar scenario was discussed for a second treasury stake, namely the signing of a shareholders agreement with the Russian Federal Property Agency (Rosimuschestvo), Rostelecom's main shareholder, which wanted to manage the stake if it was transferred to Mobitel, sources with knowledge of the situation have said.
Ultimately, a decision on a deal with Mobitel was not reached, and the 12-month period deadline for selling the treasury stake was March 6. The shares will now be canceled, and shareholders will, at their annual meeting, vote to approve the corresponding reduction in charter capital, Rostelecom told Interfax.
Rostelecom bought the stake for 23.2 billion rubles or 123.93 rubles per ordinary share and 87.8 rubles per preferred share a year ago. On March 5, the company's ordinary shares traded at 88.5 rubles and prefs at 61.9 rubles each on the Moscow Exchange .
"Canceling the treasury shares is the ideal solution for all Rostelecom shareholders in the present market conditions, when there is no possibility to sell the shares for an acceptable price," a source close to the Rostelecom board told Interfax.
"The presence of a large treasury stake went down badly with investors, but this decision is a balanced one - after the treasury shares are canceled, Rostelecom will keep a package of its own shares on the books of Mobitel," the source said.
Mobitel owns 13.99% ordinary and 26.57% preferred shares or 15.04% Rostelecom issued shares.
The cancelation of the treasury stake represents "a premium for all shareholders in terms of growth in the fair value of shares and, we hope, will go down well with the market," the company told Interfax.
