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Yevtushenkov’s arrest may ruin MTS plans to acquire Svyaznoy — media

September 19, 2014, 13:56 UTC+3 MOSCOW
A source close to Sistema doubted that the holding might have made a final decision to suspend investments a day after the arrest of its main shareholder Yevtushenkov
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People pass the headquarters of Russian technology holding AFK Sistema in Moscow, Russia, 18 September 2014

People pass the headquarters of Russian technology holding AFK Sistema in Moscow, Russia, 18 September 2014

© EPA/SERGEI ILNITSKY

MOSCOW, September 19. /ITAR-TASS/. The arrest of Russian businessman Vladimir Yevtushenkov, controlling multi-industry holding AFK Sistema, may affect more than 20 planned deals of the holding, including the purchase by its mobile operator MTS of retailer Svyaznoy, business daily Kommersant reported Friday.

Several sources told the daily that the deal of MTS’ purchase of Svyaznoy had been frozen or delayed until an uncertain date due to the house arrest of Yevtushenkov and the criminal case regarding oil company Bashneft, also a unit of the holding.

“There is nobody to make a decision: the main shareholder of AFK is under house arrest, one of MTS’ board of directors (Sergei Drozdov) has gone abroad,” one of the sources said. Under the current situation, the projected deal between MTS and Svyaznoy may face higher legal risks. “If MTS concludes a large transaction, while there are financial claims on the deal of Sistema and Bashneft, it is not ruled out that such a deal may be interpreted as a withdrawal of assets from the holding,” the source said.

In total, more than 20 planned deals have been frozen, according to the sources.

“Svyaznoy is urgently looking for an investor,” a source from the telecommunications market said. The retailer’s representatives held consultations with cellular operator VimpelCom, working under the Beeline brand, but the latter refused to get involved on the same conditions as MTS did, the source said.

“I would not say that the deal has already been cancelled…But serious difficulties emerged. If the deal is not voided, it would be hardly possible on the same conditions, while new ones will take time to be worked out,” an unnamed banker said.

A source close to Sistema doubted that the holding might have made a final decision to suspend investments a day after the arrest of its main shareholder Yevtushenkov.

In July, mass media reported, referring to sources familiar with the situation, that MTS intended to buy 49% in Svyaznoy. The operator’s representatives declined then to comment on the matter.

Owned by businessman Maxim Nogotkov, Svyaznoy comprises a chain of over 3,000 outlets, Internet store Svyaznoy.ru, and projects Svyaznoy Travel and SVOY. Nogotkov’s Amsterdam-registered Svyaznoy N.V. manages the retailer.

An AFK Sistema spokesperson said that the holding “continues working in a regular mode and implements its strategy,” and “promises” to shortly finalize a number of the earlier announced deals. “We are at the final stage of negotiations on the acquisition of several new assets…We view investment opportunities with optimism,” the spokesperson said.

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