Comstar-UTS BoD Approves Agreements Signed with Rostelecom
OREANDA-NEWS. June 30, 2010. “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Group”) (LSE: CMST), the largest integrated telecommunications provider in Moscow and 82 Russian cities, announces that at a meeting, its Board of Directors approved the purchase and sale agreement between OAO Rostelecom (“Rostelecom” - RTS and MICEX: RTKM, RTKMP; OTCQX: ROSYY) and Comstar, according to which Rostelecom will purchase the common shares of OAO Svyazinvest, which account for the 17.31% of its equity, for RUB 18 billion.
MGTS Finance S.A., a company controlled by Comstar, has also received the required corporate approval for the sale of 7.69% of OAO Svyazinvest to Rostelecom for RUB 8 billion.
Therefore, the total amount of these transactions, involving the sale of the 25%+1 share stake in OAO Svyazinvest to OAO Rostelecom, amounts to RUB 26 billion. The proceeds of these transactions will be used by Comstar to pay down its outstanding debt to Sberbank in the amount of RUB 26 billion.
As has been announced previously, the closing of the transactions is subject to satisfying a number of conditions including, inter alia, obtaining the necessary corporate approvals by the parties involved, regulatory clearances, including those from the Federal Antimonopoly Service, and entering into the exchange transaction by AFK Sistema and Svyazinvest, after the completion of which, Svyazinvest will control 100% of the share capital in SkyLink CJSC and AFK Sistema will acquire the 23.33% stake in OAO Moscow City Telephone Network (MGTS). The agreements are in line with the previously announced non-binding Memorandum of Understanding (MOU) concluded by Comstar with Sistema and Svyazinvest on November 23, 2009.
The Comstar group of companies currently owns a 25%+1 share stake in Svyazinvest. Comstar has a 69.93% stake in MGTS. Svyazinvest owns a 23.33% stake in MGTS and a 38% stake in Rostelecom (50.67% of the voting shares).