A subsidiary of the System Capital Management (SCM) Holdings that belongs to Ukraine’s biggest oligarch Rinat Akhmetov and Raga Establishment Ltd. “formally and finally settled the dispute” concerning the sale of Ukrtelecom in 2013, SCM's press service reported on October 1.
The deal means that all the ongoing legal proceedings shall be discontinued, the press release clarified. No other details of the settlement have been disclosed.
Raga claimed earlier it sold a 92.8% stake in Ukrtelecom to SCM for an agreed price of $860mn, while it only received payment of $100mn. In May 2018, the London arbitration court ruled in favour of Raga, thus making SCM liable to pay about $821mn in compensation. As a part of litigation, some of SCM's Cyprian assets were frozen between December 2017 and June 2018.
“Besides the settlement with Raga, SCM will have to resolve an outstanding conflict with Oschadbank, which managed to arrest Ukrtelecom’s 92.7% stake pledged under a UAH1.8bn loan to an SCM subsidiary. Ukrtelecom’s value is definitely much smaller than the amount claimed by Raga ($821mn), also taking into account the financials claims of Oschadbank and Ukreximbank,” Alexander Paraschiy of Concorde Capital said in a note. “Therefore, there is no reason for SCM to pay that amount to Raga. Most likely, the new deal assumes a much smaller payment by SCM (no more than 50% of that amount). As we assumed before, the key source of funds for a possible payment to Raga could be dividends from Metinvest. Now that the conflict with Raga has been resolved, SCM is able to settle issues with state banks and re-establish its ownership rights over 92.8% stake in Ukrtelecom.”