MTS Finance

MTS Finance – 100% "subsidiary" of MTS company, is registered in Luxembourg.

Assets

What assets this offshore has, in MTS do not report. In fact MTS Finance is the SPV company (special purpose vehicle, the company created under utilitarian needs of business), not the leading operating activities and created for service of different transactions.

History

2005: A failure in Kyrgyzstan

In November, 2005 along with purchase of MTS Finance of 51% of stocks of offshore Tarino for $150 million put the option for 49% of stocks of this offshore was concluded. For the seller – Nomihold Securities - as was considered, stood the son of the president of Kyrgyzstan Askar Akayev Aydar and structure of the Kazakh Alyans-Capital group overthrown the same year. At the time of the conclusion of the transaction of Tarino through three offshores on the Isle of Man - Flaxendale Holdings, Kyrgyz Mobil Tel and George Resources – owned 100% of stocks of the only thing on that the GSM operator of Kyrgyzstan of Bitel.

However in several days after the declaration of the transaction the office "Bitel" was occupied by representatives of unknown Russian company "Rezervspetsmet". Later half a year assets with Bitel, including a subscriber base, were displaid in the Skye Mobile company belonging to the Russian holding Altimo (is a shareholder of the competitor of MTS - VimpelCom). At the beginning of 2008 "Skye Mobile" was purchased by structures of Kazakh "ATP Bank" at the expense of VimpelCom, the received operator in management. At the end of 2010 VimpelCom took 51% of shares of the Kyrgyz operator for $150 million, MTS was not succeeded to regain control in Bitel.

2011: Arrest of assets in Britain

It is known that in addition to the transaction with Bitel "daughter" also released MTS two bond issues of $400 million and $750 million with repayment periods in 2012 and 2020 according to (both are under 8% per annum)^[1].

On January 31, 2011 MTS announced obtaining the decision of the High Court of England on seizure of assets of its "subsidiary" of MTS Finance in England and Wales. MTS Finance is forbidden to dispose of assets in these jurisdictions for the amount within $208 million and also to reduce their cost.

Arrest of assets is executed in connection with non-execution of MTS Finance of the November decision of the International arbitration in London. Then the arbitration obliged "subsidiary" of MTS to exercise the put option for 49% of stocks of the offshore Tarino which was once the controlling shareholder of the Kyrgyz mobile operator "Bitel". According to the arbitration award, MTS Finance should pay the claimant of Nomihold Securites $170 million for actions and $5.9 million more as the dividends provided by the option agreement. On January 5 the appellate instance confirmed legality of the solution.

Non-execution of the decision of the London arbitration within two months is a condition for a technical default of these loans. With respect thereto MTS already announced the offer on the early redemption of the first of these bonded loans and also intention to change conditions of the second loan with a repayment period in 2020.

In MTS reported that consider the decision of the London arbitration unfair as Bitel was displaid from under Tarino control, and consider options of further actions. "MTS lets know that it does not intend to perform the arbitration award as formally it concerns not most, but its offshore "daughter" for whom do not cost any assets", - the CEO of the analytical agency "Rustelekom" Yury Bryukvin notes.

Notes