O2 CR owners PPF seeking USD1.29bn loan from group’s CETIN unit; minority shareholders mount legal challenge

1 Jun 2015

PPF Group, the privately held international financial group controlled by Czech billionaire Petr Kellner which owns around 85% of fixed and mobile operator O2 Czech Republic, is looking to secure a CZK32.3 billion (USD1.29 billion) loan from CETIN, the new non-listed entity that was created from the recent separation of O2 CR’s infrastructure assets and operations. In April this year, following a marathon ten-hour meeting, shareholders of O2 CR approved a plan to spin off its infrastructure business – which currently generates about half of the group’s total operating profits – into CETIN, leaving the rump of O2’s operational business as a publicly-listed operator offering a range of voice, data and TV services. Now, PPF Group is said to be seeking a loan from CETIN to repay an acquisition loan it initially used to buy a stake in O2 from then owner Telefonica of Spain. It will not, however, look for a loan from O2 CR itself – as it had once planned. In December 2014, O2 shareholders approved an up to CZK24.8 billion loan to PPF, but that was later frozen following the group’s functional separation. PPF Group has also said it aims to launch a buyback of O2 CR and CETIN shares, and will publish its pricing offer at the time of the buyback announcement.

In a related development, O2 CR minority shareholders have filed a lawsuit in the Republic claiming that the aforementioned decision to separate the operator into two is ‘invalid’. At a 29th May meeting, the legal challenge was filed by KLB Legal, a firm representing the telco’s minority shareholders. A spokesman for the minority shareholders, David Kubon, said in an interview with Patria Online: ‘In our opinion, the general meeting did not take place in harmony with the law on business corporations, as a result of which the general meeting’s resolution on the split was passed unlawfully. The key problem, however, lies in the abuse of the majority voting right of the chief shareholder [PPF] to the detriment of minority shareholders.’

Czech Republic, O2 Czech Republic (incl. CETIN), PPF Group