Mikhail Prokhorov consolidates Kvadra while the minority shareholders await an offer again

The Fas informed on Friday that it had granted the request by Ragato Management Ltd of the British Virgin Islands to purchase 30% of the shares of Kvadra. Ragato is owned by Mikhail Prokhorov, according to his declaration filed at the registration for candidacy for President in 2012.

Mr.Prokhorov’s ONEXIM Group purchased 48,6% of the shares of Kvadra (then TGK-4) in 2008, during a sale of the assets of the RJSC “UES of Russia”, for 26 billion roubles. Onexim Holdings Ltd of Cyprus owned the shares, but later those were assigned to a subsidiary - Joule Energy Ltd. Meanwhile, according to a source of Kommersant, ONEXIM indirectly owns approx. 81% of Kvadra. ONEXIM refused comments on the stock owned by the holding.

A source close to the group informed that the transaction of the purchase of Kvadra shares by Ragato is a “technical operation”. It is aimed at the pre-sale consolidation of ONEXIM’s stock of the energy company, according to yet another interlocutor of Kommersant. M.Prokhorov wanted to sell the Kvadra shares back in 2011. Inter RAO was interested, but the FAS withheld its approval. The Service has also blocked the purchase of Kvadra by Gazprom Energoholding (GEH) this year. GEH yesterday informed Kommersant that they are currently occupied with the purchase of MOEK, and that the transaction with Kvadra was not on the agenda. Oleg Deripaska’s Eurosibenergo, the former general director of which Evgeny fedorov mentioned the company’s interest towards Kvadra, refused comments yesterday.

The transaction with Ragato causes the matter of the obligatory offer, successfully avoided by ONEXIM ever since the moment of purchase of Kvadra, to resurface. David Herne, Director of Spring Foundation (owns approx. 5% of Kvadra shares) confirmed to Kommersant that ONEXIM structures made no offer to the minority shareholders. He believes that the offer might still be made, and soon, but its acceptance by the minority shareholders will depend on the terms – the average price of the shares of Kvadra for the last six months is significantly lower than the securities’ price during the revoked offer of 2008 (2,7 kopecks per share). A common share of Kvadra is traded at the MICE at 0,33 kopecks only.

According to Advocate Arthur Rokhlin, Partner of the Law Firm "YUST", if the seller is affiliated with the buyer, no obligation to make an offer arises. But this means that such obligation arose earlier, when the transaction of purchase of the shares by a structure affiliated with Onexim Holdings that had already owned 49,99% of Kvadra was completed. Over 50% then was jointly owned by them as a result of that transaction. Alexander Nektorov, Partner of the law firm “Nektorov, Saveliev and Partners” points out: as soon as the owner of the shares became affiliated with the owner of the stock, due to which the 50% threshold was exceeded, it was obliged to make an offer; and as soon as it became affiliated with the owner of the 30%, the offer obligation also arose, because the 75% threshold was exceeded. Meanwhile, as Mr.Mektorov points out, the purchase price from other shareholders is calculated in accordance with the average price of the shares for six months after the date fixed for the obligatory offer. The lawyer says: “Some cunning buyers deliberately filed the obligatory offer much later than the obligation arose, waiting for the price to go down. But the higher Court of Arbitration, in a draft resolution of its Plenum (not yet approved – Kommersant), expresses the opinion that the price of the shares’ purchase must be calculated at the moment, when the buyer’s obligation to make the offer arose, and not when the offer was actually filed”.

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