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MOSCOW, May 5 (PRIME) -- The Russian government has instructed the Federal State Property Management Agency to transfer its 7.43% stake in major wireline operator Rostelecom to state owned Vnesheconombank (VEB), according to an order by Prime Minister Vladimir Putin seen by PRIME late Friday.
In 2009, VEB bought a 10.00% stake in Rostelecom, but after the seven interregional subsidiaries of state-run holding Svyazinvest and wireline company Dagsvyazinform were merged into Rostelecom in April 2011, VEB’s stake in Rostelecom decreased to the current 2.45% due to the conversion.
Then the government also instructed the property agency jointly with the Communications and Mass Media Ministry to take all the necessary measures envisaged under the previous presidential decree to complete a merger between Svyazinvest and Rostelecom within the upcoming 11 months. Under the decree, the government should jointly obtain more than 50% of Rostelecom’s common shares jointly with VEB.
Svyazinvest now holds a 43.37% common stake in Rostelecom.
In turn, the government now holds a 75% minus one share in Svyazinvest, while the remaining 25% plus one share is owned by Rostelecom.
Under the proposed merger, Rostelecom is expected to offer its additional shares to the state property agency in exchange for the stake in Svyazinvest. After that, Svyazinvest’s shares are to be converted into the shares of Rostelecom, while Rostelecom’s treasury securities are to be cancelled. The conversion ratio has yet to be determined.
Before the merger, Svyazinvest is expected to increase its common stake in Rostelecom to about 45.7% by using funds from Rostelecom, which is expected to acquire 1.7 billion rubles worth of Svyazinvest’s additional shares. Svyazinvest is then expected to use the funds to buy Rostelecom’s unspecified stake from Rostelecom’s fully-owned subsidiary Mobitel, which holds a 6.55% common stake in the parent company.
Moreover, Svyazinvest is expected to receive a common stake of about 1.91% in Rostelecom from Mobitel in exchange for a 50% interest in CDMA operator Sky Link.