Russia's MegaFon Makes $5.15 Billion Payment to Settle Shareholder Disputes
The fractious shareholders who own Russia's MegaFon have settled their differences, and the company is to be floated on to the London stock exchange after making a massive dividend payment to the current shareholders.
MegaFon is to make a dividend payment of US$5.15 billion to its three shareholders, TeliaSonera, AF Telecom and Altimo. After that, Altimo will sell its stake in the company and TeliaSonera will reduce its ownership to 25%.
Altimo will exit from MegaFon and sell its 25.1 percent ownership in two parts; 14.4 percent to a subsidiary of MegaFon for US$2.16 billion while the remaining 10.7 percent will be sold to AF Telecom for US$1.61 billion. TeliaSonera has also agreed to pay US$200 million to Altimo in order to complete the transaction.
In total, Altimo will receive US$5.2 billion including dividends from MegaFon.
TeliaSonera's current ownership in MegaFon is 43.8 percent, of which it holds 35.6 percent directly and 8.2 percent indirectly through its 26.1 percent ownership in Telecominvest (TCI).
As part of the agreement, AF Telecom will acquire TeliaSonera's shares in TCI for US$1.45 billion.
TeliaSonera said that it expect to receive approximately SEK 22 billion (US$3.3 billion), of which approximately SEK 14 billion in the second quarter of 2012, in dividends and proceeds from the divestment of its indirect stake of 8.2 percent.
Following these transactions, TeliaSonera will own 35.6 percent, AF Telecom 50 percent plus one share while MegaFon, through its own subsidiary, will own the remaining 14.4 percent.
AF Telecom will get majority control of MegaFon.
The shareholders have agreed to work towards an IPO of MegaFon including a listing on the London Stock Exchange as soon as practically possible, involving up to 20 percent of MegaFon's shares will be publicly traded, of which TeliaSonera and MegaFon will contribute with up to 10.6 percent and 9.4 percent, respectively.
The parties have also agreed that if an IPO of MegaFon has not been consummated by the end of 2014, TeliaSonera shall have the right to sell to AF Telecom or a subsidiary of MegaFon, and AF Telecom or a subsidiary of MegaFon will have the right to buy 10.6 percent of TeliaSonera's shares in MegaFon. The price paid will be based on fair market value.
TeliaSonera and Altimo are still in dispute over their investment in the Turkish mobile network, Turkcell.