The three major owners of Russia’s MegaFon have agreed a major reshuffle of the existing shareholder structure, a dividend totalling US$5.15bn and an IPO of MegaFon “as soon as practically possible”.
Sweden’s TeliaSonera, Russian businessman…
The three major owners of Russia’s MegaFon have agreed a major reshuffle of the existing shareholder structure, a dividend totalling US$5.15bn and an IPO of MegaFon “as soon as practically possible”.
Sweden’s TeliaSonera, Russian businessman Alisher Usmanov’s AF Telecom and Altimo, the investment arm of Mikhail Fridman’s Russia-based Alfa Group, said in a joint statement the agreement, made up of several transactions, resolves their long-running dispute over the governance of Russia’s second largest mobile operator.
As part of the agreement, expected to be completed today (24 April), AF Telecom will gain a majority shareholding of 50% plus one share, TeliaSonera will reduce its stake from 43.8% to 35.6% and Altimo will exit the business entirely. A MegaFon subsidiary will own the remaining 14.4%.
AF Telecom will pay US$1.45bn for TeliaSonera’s 8.2% indirect stake in MegaFon, which it holds via its 26.1% stake in Telecominvest (TCI). TeliaSonera is expected to receive 20% of the proceeds – about SEK2bn (US$296.5m) – when the transaction closes and the remainder will be paid in four equal annual instalments plus interest.
“TeliaSonera is expected to book a capital gain of SEK4.4bn (US$652.4m) in the second quarter of 2012 in connection with this sale,” the statement read.
Altimo is expected to receive US$5.2bn for its 25% stake in MegaFon, including dividends. As part of the agreement, Altimo will sell 14.4% to a MegaFon subsidiary for US$2.16bn and the remaining 10.7% to AF Telecom for US$1.6bn. TeliaSonera has agreed to pay Altimo US$200m to complete the transaction.
The Swedish telco said it aims to retain a long-term 25.1% stake plus one share in MegaFon.
“TeliaSonera has focused on realising the value and increasing the liquidity of our investment in MegaFon, whilst maintaining a long-term strategic ownership in the company,” CEO Lars Nyberg commented.
“By reaching an agreement with the two other partners, whereby MegaFon will pursue an IPO and adopt an agreed dividend policy, we have resolved the ownership disputes and found a way to increase both the liquidity and value of our asset.”
The shareholders said they aim to complete an IPO for MegaFon, which would include a listing on the London Stock Exchange, before the end of 2014. They said up to 20% of the company’s shares will be floated, with TeliaSonera contributing up to 10.6% and MegaFon 9.4%.
Until then, TeliaSonera and AF Telecom will each have three members on the MegaFon board, which will also include an independent director, as well as equal voting rights at shareholder meetings.
If an IPO is not completed by the end of 2014, AF Telecom or a MegaFon subsidiary will have the right to buy 10.6% of TeliaSonera’s shares in MegaFon at market value.
In addition to the US$5.15bn dividend, the shareholders have agreed MegaFon will adopt a dividend policy that will see it make annual payments of either 50% of its net income or 70% of cash flows in rubles as ordinary dividend (whichever is the higher).
“MegaFon shall target to maintain a leverage of net debt/EBITDA ratio between 1.2-1.5x while excess cash shall be returned to shareholders,” the statement read.
TeliaSonera expects to receive a dividend of SEK12.4bn from MegaFon for its direct 35.6% stake in the company.
Usmanov said AF Telecom is pleased to have reached an agreement that enables it to increase its ownership in MegaFon, pursue an IPO for the company and put “shareholder disputes firmly behind us”.
Update [3.20pm BST]: Transaction closed
In a separate statement issued today (Tuesday, 24 April) in the afternoon, TeliaSonera confirmed that MegaFon paid out dividends of US$5.15bn to its shareholders, that Altimo sold its shares in MegaFon to AF Telecom and the MegaFon subsidiary and that TeliaSonera has sold all its shares in Telecominvest to AF Telecom.
UBS acted as sole financial adviser to Altimo and provided a fairness opinion in relation to the sale of Altimo’s 25.1% indirect staek in MegaFon. Skadden, Arps, Slate, Meagher & Flom provided legal advise.
Akin Gump acted as legal adviser to AF Telecom. Teliasonera was advised by White & Case.
