Court rulings on Ukrtelecom nationalization overturned by supreme court

2018/7/5 23:57:22

Analyst: “…this ruling merely extends this contest for many months, if not years.”

KYIV, June 5, 2018 – Ukraine’s Supreme Court satisfied an appeal by Ukrtelecom’s (UTLM UK) owner ESU and overturned an appellate court’s ruling canceling an agreement to privatize 92.8% of the shares in Ukrtelecom, Concorde Capital informed its clients today. The information originated in an Interfax-Ukraine report on July 4, citing its sources. The Supreme Court ordered the case returned to a first-tier court for review, Interfax said.


Recall, Ukraine’s State Property Fund (SPF) initiated litigation last year aiming to cancel a 2011 agreement under which it sold a 92.8% stake in Ukrtelecom to ESU for UAH 10.6 bln. The SPF based its position on ESU’s breach of some of its post-privatization commitments, including failure to invest USD 450 mln into Ukrtelecom by 2016, as well as failure to spin off to the state Uktelecom’s division that provides special communication services for government agencies by 2013. The SPF’s claim was supported by the Kyiv Economic Court in October and by the Kyiv Appellate Economic Court in December.


Concorde analyst Alexander Paraschiy added: “This is a really unexpected development that significantly reduces the SPF's chances to recover its control over Ukrtelecom. For SCM, this is just the beginning of the battle for the contested stake in Ukrtelecom, which had been pledged under a loan from Oschadbank (OSCHAD). Recall, just a month ago, the Kyiv Economic Appellate Court rejected Oschadbank’s foreclosure claim on the pledged shares, referring to its October ruling that the shares should be returned to the SPF. Now the bank has the chance to seize the collateral. In any case, this ruling merely extends this contest for many months, if not years.




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