UPDATE: MegaFon board decides to delist GDRs from LSE

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MOSCOW, Jul 16 (PRIME) -- The board of directors of big Russian mobile operator MegaFon approved at a meeting on July 15 a program to purchase ordinary shares and global depositary receipts (GDRs) and cancel listing of receipts on the London Stock Exchange (LSE), the company said on Monday in a statement.

The board having evaluated the benefits of MegaFon remaining a public company with GDR listed on the LSE and ordinary shares listed on the Moscow Exchange determined that remaining a public company is not a strategic priority for the operator and approved a program to purchase ordinary shares and GDRs of the company and the cancellation of the listing of GDRs on the LSE.

“Proposed delisting reflects the scale of strategic change we need to make in order to complete MegaFon’s transformation into a leader of the Russian digital market,” Executive Director Gevork Vermishyan said.

“While we have delivered on the immediate objectives of the transformative strategy we announced in May 2017, it is clear that the ambitious scale and nature of the further steps we may need to take to achieve this, could create significant additional risk for our minority equity holders. It could negate the delivery of our current OIBDA and revenue growth and leverage cap objectives over the medium term, and necessitating for capital allocation towards acceleration of our strategy and potentially away from our prior dividend policy.

“In view of this and the ongoing volatile external environment for our equity, the board has concluded that given the situation it is appropriate to offer our minority holders an exit opportunity at a premium to current trading prices if they wish to take it.”

Ordinary shares and GDRs will be bought back by MegaFon Investments (Cyprus) Ltd. (MICL), a wholly-owned subsidiary of MegaFon, as a tender offer to purchase for cash up to 128,950,036 of the issued and outstanding ordinary shares and GDRs, representing 20.8% of MegaFon’s issued and outstanding shares. The purchase price for securities tendered will be U.S. $9.75 per ordinary share and GDR.

The tender offer will commence on Monday and is expected to expire on August 22, and it will be made by MICL to all holders of ordinary shares and GDRs, other than ordinary shares or GDRs held by USM Holdings, Gazprombank Group and the GDRs currently owned by MICL.

The news pushed MegaFon’s common shares up 13.49% to 572 rubles on the Moscow Exchange as of 10.03 a.m. Moscow time.

(62.2934 rubles – U.S. $1)

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