MegaFon shareholders approve purchase of Scartel for $1.9 bln
MOSCOW. Sept 13 (Interfax) - The shareholders of MegaFon , one of Russia's top three mobile operators, approved the acquisition of 100% of LLC Scartel and 100% of LLC Yota from MegaFon's controlling shareholder Garsdale at an extraordinary general meeting on Thursday.
Garsdale, as an interested party in the deal, did not vote. MegaFon's second largest shareholder, Scandinavian telecom company TeliaSonera, which owns 25.17% of the operator, supported the acquisition of the wireless broadband provider.
MegaFon will pay a total of about $1.9 billion for Scartel, including debt.
The basic cash component of the deal without Scartel's debt is $1.18 billion. MegaFon will pay that amount in two installments: $590 million (50%) one year after the deal closes (plus 6% annual interest) and the other $590 million (plus 6% interest) after two years. The total cash payment will be $1.286 billion.
Proportionate to their stakes in Garsdale, Alisher Usmanov's USM Holdings, with 82%, will get over $1 billion of this amount; Telconet Capital (13.5%), which is owned by Sergei Adonyev and Albert Avdolyan, will get $174 million; and state corporation Rostec (4.5%) will get $58 million.
Scartel's maximum debt in the context of this deal is set at $600 million plus up to $20 million a month starting July 1 this year until the purchase is completed. Net debt consists of loans extended by Garsdale and its associates - around $400 million - and MegaFon will be acquiring this debt at face value, as well as loans and credits owed to third parties, but not including liabilities involving working capital.
In other words, the final valuation of Yota, not including additional debt, is about $1.87 billion. This figure might increase depending on whether Scartel takes on more debt. If the deal is closed in September, it could add as much as $60 million to net debt ($20 million per month in July-September).
MegaFon CFO Gevork Vermishyan said 80% of Scartel's debt would be refinanced with MegaFon's cash, which totaled 24.9 billion rubles at the end of the first half. The interest burden on the remainder of the debt, primarily vendor credit, will be reduced significantly. Scartel borrowed at interest rates that were 2.5-3 percentage points higher than MegaFon, Vermishyan said.
MegaFon's net debt/OIBDA ratio was 0.59 at the end of the second quarter of 2013.
