MTS subsidiary in Uzbekistan to be auctioned July 1; starting price - $289 mln
TASHKENT. June 4 (Interfax) - The property of Uzdunrobita LLC, the bankrupt Uzbek subsidiary of Russian mobile operator Mobile TeleSystems (MTS) , will be auctioned off on July 1, 2013 at a starting price of 600 billion som ($289 million at the current exchange rate), according to an announcement from creditors published in the local media on Tuesday.
The property will be offered in a single lot, according to the minutes of a May 31 meeting of creditors. The security deposit to bid in the auction is 20% of the starting price. The application deadline is June 28.
Uzdunrobita filed for bankruptcy with the court on January 18. At a meeting on March 5, the MTS subsidiary's creditors decided to open liquidation proceedings against it and asked the court to declare the company bankrupt.
However, in a March 11 ruling the court had rejected the creditors' request to open liquidation proceedings, instead prolonging the monitoring procedure at Uzdunrobita.
Uzbek regulatory bodies initiated inspections against Uzdunrobita in June 2012. That same month, the Prosecutor General's Office sanctioned searches in the company's offices, the seizure of documents and the arrest and mass interrogation of employees.
On July 17, MTS was forced to freeze its operations in Uzbekistan in line with demands by the Communications and Information Agency, shutting off communications services to more than 9.5 million cell phone users across the country.
In August, economic court in Tashkent upheld the agency's revocation of all Uzdunrobita licenses.
On September 17, the Tashkent city court rendered its verdict against four of Uzdunrobita's top managers and passed non-custodial sentences, in addition to transferring the company's property to the state.
The Prosecutor's Office has accused Uzdunrobita's top managers of taking money from the company by procuring equipment at inflated prices, as well as by "organizing a criminal group for the purpose of extracting unsupervised profit."
On November 8, the appeals board upheld Uzdunrobita's appeal and overturned the earlier ruling transferring the company's property to the state. It set financial claims against the company at $600 million with an option for paying that off over eight months' time.
The board also ruled that Uzdunrobita was a civilian defendant in the case against the four managers and lifted the earlier imposed freeze on company property. The verdict on the managers was left in force.
Overall, the claims made against the company by the General Prosecutor's Office, anti-monopoly entities, the Uzbek Agency for Communications and Informatization and tax bodies surpass $1 billion, which is equal to the amount of investments that MTS made in the development of its Uzbek business.
MTS considers the accusations against Uzdunrobita to be unjustified. "MTS is also standing firm on its right to make use of all possible legal instruments at the international level for the recovery of losses incurred as a result of unlawful actions against the MTS subsidiary company in Uzbekistan," the Russian company said, referring to the bankruptcy procedures againstUzdunrobita.
MTS said that it has filed a lawsuit against Uzbekistan at the International Center for the Settlement of Investment Disputes at the World Bank. The lawsuit was registered on November 15, 2012 and has been adopted.
The official exchange rate on June 4 was 2,073.97 som/$1.
