Daily analyst comments
Investors Protection Association worried about Svyazinvest restructure: new hope for minority holders?
25.06.09 10:51
Sector: Telecommunications, IT
The Investors Protection Association, an influential organization for protection of investors’ rights, is set to defend the rights of interregional communication companies’ minority shareholders. This fact gives us reason to believe that the state may opt not to ignore minority shareholders’ interests. Otherwise, Svyazinvest may fail to get the necessary 75% vote in favor of restructuring.
The Investors Protection Association (IPA) has expressed concern over the possible dilution of equity stakes currently held by minority shareholders of interregional telecommunication companies (MRK) after the restructure of Svyazinvest and the consolidation of the holding’s assets around Rostelecom, news agency Interfax reported on June 24 with reference to IPA CEO, Denis Kulikov.
Although we favor the concept of a merger between interregional telecommunication companies and Rostelecom, we entirely share the IPA’s concerns over the possibility of unfavorable swap ratios for MRK minority shareholders (see our daily published June 1, 2009). Although Svyazinvest has not yet specified either a swap ratio calculation technique or a merger scheme, there is a likelihood that the swap ratios will not take into account the fact that Rostelecom is currently overvalued, while MRKs, on the contrary, are mainly undervalued.
Given that IPA members own quite large share packages in interregional telecommunication companies, the government may well acknowledge shareholders’ positions and accommodate the interests of MRK minority stockholders.