Kyrgyz Court Voids Bitel's $25 Mln Dividends to MTS Subsidiaries

MOSCOW, Dec 4 (Prime-Tass) -- An arbitration court in Kyrgyzstan ruled on December 1 that three subsidiaries of Russia's largest mobile operator Mobile TeleSystems (MTS) illegally received about US$25 million in dividends from Kyrgyz mobile operator Bitel, the Kyrgyz mobile operator said in a press release Monday.

The court ruled that the decision to pay dividends, which was made on January 5, 2005, was illegal and that the three companies have to return the money to Bitel, the Kyrgyz operator said.

In September, MTS warned investors that three of its subsidiaries could face a $25 million claim from Bitel. The three subsidiaries are registered on the Isle of Man.

At the time when the money was transferred MTS did not control the three companies, MTS said in September.

MTS purchased an indirect ownership rights to a 51% stake in Bitel for $150 million in late 2005, but the purchase was challenged by a little-known Russian company, Rezervspetsmet. At the moment, Rezervspetsmet has operating control over Bitel, while MTS is fighting a court battle to regain control over the operator.

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Posted to the site on 4th December 2006