MTS under arrest

Shares of the operator become cheaper during the trials of AFK and Rosneft.
On the suit of Rosneft to AFK Sistema, a part of the holding's assets was seized yesterday: a package in the mobile operator MTS worth about 150 billion rubles, 100% shares of the network of Medsi clinics and 90.47% of the Bashkir Electric Grid Company (BESK). In Sistema they insist that the shareholders of AFK and MTS have already lost about 150 billion rubles. On the fall in the value of companies as a result of proceedings with Rosneft. This amount may increase: MTS quotes dropped by another 5% last night. In addition, according to AFC, at the time of the arrest, it will not be able to receive dividends from the arrested packages.

Yesterday, the Office of the Federal Bailiff Service in Moscow seized holdings of shares of a number of assets owned by AFK Sistema (31.76% stake in MTS, 100% of the network of Medsi clinics, 90.47% of BESK) on the basis of the judicial act of the Bashkortostan Arbitration Court Within the scope of the claims under the suit of Rosneft and Bashneft against the AFK for 170.6 billion rubles. According to Sistema, the court limited it and Sistema-invest in the rights to receive income on the arrested shares.

Rosneft's press secretary Mikhail Leontiev told Kommersant that the valuation of the shares is in line with the demand for Rosneft's 170.6 billion rubles. And "recognized by the court as adequate", the arrest will be a guarantee for the amount of damage.

In AFK Sistema "they consider the claims of the plaintiffs to be illegal and unreasonable". "These measures, like the whole lawsuit, are not a consequence of the desire to establish in the course of the trial the truth that is already so well known to the entire investment community, but another attempt to exert unprecedented pressure on our company," Sergei Kopytov of Sistema said. He added that the shareholders of AFK and MTS as a result of the claim of Rosneft have already suffered damage of more than 150 billion rubles. As a result of the fall in the value of shares, "after taking interim measures, their losses are likely to increase significantly."

Quotes of MTS yesterday actually fell after the announcement of the arrest of shares. On the Moscow stock exchange at the time of the message, the trading session was over, the arrested stake in MTS was valued at 151.7 billion rubles. At the same time, on the New York Stock Exchange, the operator's shares as of 21:40 in Moscow fell by 5%, the company's capitalization was estimated at $ 7.83 billion. If it comes to selling the arrested package from the auction, it is obvious that its value will further decline, The analyst of Raiffeisenbank Sergey Libin states. At the same time, the MTS insists that the arrest "does not interfere with the operating activities" of the company. "The situation has no impact on operations with MTS shares and the right to receive dividends on MTS shares that are owned by other shareholders," the MTS specified.

Unusually, the court forbade the AFC to receive dividends from the arrested shares, lawyers say. "The ordinary arrest of shares implies a ban on their disposal, that is, the company can not alienate these securities, but has the right to receive income from them," explains Ruslan Nagaibekov, head of corporate practice at Liniya Prava. The prohibition on obtaining income should be motivated separately by the court, but in the files of arbitration cases, the judicial act on seizing the shares of the AFC was not published last night. "If the AFC wins the dispute, it can then demand that Rosneft collect damages incurred in connection with the interim measures if it proves that the measures were taken unreasonably," the lawyer adds.

The legal proceedings between Rosneft and AFK began in early May, when the oil company filed a lawsuit with the Moscow Arbitration Court, accusing the AFK of damaging Bashneft for 106.6 billion rubles. (Until 2014, the controlling stake was in the AFK, then passed to the state, which in October 2016 it was bought by Rosneft). The Moscow Arbitration Court did not consider the lawsuit, after which Rosneft redirected it to the arbitration of Bashkiria, increasing claims to 170.6 billion rubles. Consideration of the claim is scheduled for June 27.