MegaFon delisting London GDRs; flags up possible Moscow delisting in future

16 Jul 2018

Russian cellco MegaFon announced today that its Board of Directors have determined that ‘remaining a public company is not a strategic priority’, and has approved a programme for a subsidiary to purchase the group’s ordinary shares and global depositary receipts (GDRs) from minority shareholders, plus the cancellation of its GDR listing on the London Stock Exchange (LSE).

The programme to purchase ordinary shares and GDRs will be carried out by MegaFon Investments (Cyprus) Limited (MICL), a wholly-owned subsidiary of MegaFon, via a cash tender offer for up to 128,950,036 issued and outstanding ordinary shares and GDRs, representing 20.8% of MegaFon’s issued and outstanding shares. The purchase price for securities tendered will be USD9.75 per ordinary share and for each GDR. The offer commences today (16 July 2018) and is expected to expire on 22 August 2018. The tender offer will be made by MICL to all holders of ordinary shares and GDRs, other than ordinary shares or GDRs held by USM Holdings, Gazprombank Group and the GDRs currently owned by MICL.

MegaFon intends to commence the process of cancelling the GDR listing shortly after the completion of the tender offer. The company will also ‘re-visit’ the question of a potential Moscow delisting following the tender completion. Due to the complexity and potential costs of delisting ordinary shares from the Moscow Exchange, the Board of Directors ‘has not decided on such a delisting at this time’, the company release added.

Gevork Vermishyan, Executive Director of MegaFon, said: ‘Proposed delisting reflects the scale of strategic change we need to make in order to complete MegaFon’s transformation into a leader of the Russian digital market. While we have delivered on the immediate objectives of the transformative strategy we announced in May 2017, it is clear that the ambitious scale and nature of the further steps we may need to take to achieve this, could create significant additional risk for our minority equity holders … the Board has concluded that given the situation it is appropriate to offer our minority holders an exit opportunity at a premium to current trading prices if they wish to take it.’

Russia, MegaFon