20 Mar 2013 11:30

Rostelecom to set price for buyout of minority shareholders March 27

MOSCOW. March 20 (Interfax) - The board of directors of Rostelecom , Russia's national telecommunications provider, will on March 27 consider the price at which shares will be bought out from minority shareholders who do not support the company's merger with state telecom holding company Svyazinvest, the company said in a statement.

Ernst & Young has appraised Rostelecom at 136.05 rubles per common share for the merger with Svyazinvest.

Analysts expect that the valuation of shares for the buyout from minority shareholders who do not vote for the restructuring will have a 10-15% discount. As a result, the buyout price could be slightly below the market for common shares and higher for preferred shares, Uralsib FC analyst Konstantin Belov told Interfax. This means that primarily holders of preferred shares will want to tender their shares.

Rostelecom common and preferred shares closed at respectively 115.04 rubles and 91.03 rubles on the Moscow Exchange on Tuesday.

Under Russian law, the amount of money used to buy out shares from dissenting minority shareholders cannot exceed 10% of the value of a company's net assets. The current market value of all Rostelecom preferred shares is currently 22.1 billion rubles. Rostelecom's net assets stood at 277 billion rubles at the end of 2011; the statement for 2012 has not been released yet.

Rostelecom's merger with Svyazinvest is supposed to be completed in October-November 2013.

Rostelecom owns about 500,000 km of backbone telecom networks, as well as infrastructure giving it access to 43 million households throughout Russia.

Rostelecom's principal shareholder is Svyazinvest with 41.84% of stock and 45.29% of common shares. The Federal Property Agency holds 6.86% and 7.43% respectively, and state lender Vnesheconombank (VEB) holds 2.26% of stock and 2.45% of voting shares.

Rostelecom's third largest shareholder was Gazprombank , as it held as security shares that were owned by Konstantin Malofeyev's Marshall Capital, which in late February announced the sale of its 10.7% stake in Rostelecom to Arkady Rotenberg's Bellared Holdings Ltd.

Rostelecom subsidiary Mobitel holds 5.24% of the parent company's stock and 4.64% of common shares.

Rostelecom's charter capital consists of about 2.943 billion common and 242.831 million preferred shares.