The string of communication is as follows :
1. AMSOST letter to SSTL CEO
2. Response from Legal Head SSTL
3. AMSOST proposals to SSTL
4. Response from Legal Head SSTL
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1. AMSOST letter to SSTL CEO
Dear Respected Vsevolod,
We welcome the proposal of inclusion of the Agency of Russian Federation in the company as investor at the specified valuation. We are however shocked at the proposal of giving the Indian Promoters greater of 22 crore shares at Rs 10 each. In our view this is completely unjustified and signals oppression of the minority shareholder. We, as a group feel that this move is against the spirit of the respectable High Court order. The spirit of the court order clearly directs the company to fulfill the two conditions of listing and providing a exit route at all times before going ahead with any more restructuring.
We think this proposal undermines the otherwise globally shareholder friendly image of the Sistema group in terms of not carrying its minority shareholders interests along with its own. We had been diluted heavily in 2008 and now again on the eve of the High Court IPO guideline, the company has chosen to disassociate totally from its shareholders by putting them at the receiving end.
A respectable proposal surely would have been if the minority shareholders were offered shares in the same proportion as the Indian promoters at Rs 10 in all fairness. Alternatively, if the companies stock is valued by an international agency at INR 49.31, an allotment of such a large quantum of shares at such a steep discount tantamounts to daylight robbery of other shareholders interests.
As investors, we have kept full faith in Sistema to steer this company in the right direction. We wish the company and its team well and expect that the company should also reciprocate by not taking any actions which are so detrimental to the shareholders interests.
We would like the company to reconsider this unacceptable proposal. Kindly allow us meeting time in the next day or two to present to you alternate proposals that will be a win win situation for all.
Awaiting an early response.
Thanking you,
Sincerely,
Sd/-
Alok Jain and many other shareholders
Association of Minority Shareholders Of Sistema Shyam Teleservices Ltd
Amsost.blogspot.com
B6/102 Safdarjung Enclave
New Delhi 110029
9811075877
CC: Respected Mr. Ron Sommer, Chariman
Respected Mr Sergey Cheremin, Dy Chairman
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2. Response from Legal Head SSTL
Mr. Alok Jain B-6/102, Safdarjung Enclave,
New Delhi – 110029
Dear Mr. Alok Jain,
This has reference to your letter dated 25 Nov. 2009 addressed to Mr. Vsevolod Rozanov, CEO and President, Sistema Shyam TeleServices Limited regarding Company’s proposal of preferential allotment of shares.
Mr. Rozanov has instructed me to address the doubts and reservations expressed by you in your aforesaid letter qua Company’s proposal of preferential allotment of shares.
We have perused your aforesaid letter and observe that you intend to offer few alternate proposals which you claim will provide a win-win situation for all. We request you to immediately e-mail us the same at my email so that we appreciate and evaluate its viability under the applicable laws.
While on the subject, we request you to also please indicate your role, responsibility & authority to represent the Association of Minority Shareholders of Sistema Shyam TeleServices Limited and the list of shareholders and the number of shares held by them.
This reply letter is sent to you at your address mentioned in your letter under reference, though courier, as also through e-mail at amsost@gmail.com
Thanking You,
Best Regards,
Arkady Kochetkov
Head of Corporate Legal_____________________________________________________________
3. Our Proposals
Dear Mr Kochetkov,Following are the two specific proposals that we would like to forward to you and the managment.
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Proposal # 1
TO OFFER FOR SALE THE SHARES OF THE MINORITY SHAREHOLDERS AT 49.31 AS A BLENDED OFFER TO THE NEW INVESTOR. SO ESSENTIALLY, THE COMPANY WOULD ISSUE FRESH 18% (approx) NEW SHARES AND OFFER 2% (approx) OF OLD SHARES ( held by minority shareholders).
Benefits
By this option, the company would act in the spirit of the High Court ruling which clearly mentions about giving priority to shareholders for an exit route. Till date 15 months have elapsed and no exit option as per high court order has been provided by the company. Hence the benefits of complying with the court is there.
By this option, the company would act in the spirit of the High Court ruling which clearly mentions about giving priority to shareholders for an exit route. Till date 15 months have elapsed and no exit option as per high court order has been provided by the company. Hence the benefits of complying with the court is there.
Secondly, the entire court order is hinged upon listing of the shares due to the illiquidty in hands of the minority shareholders and the poor price discovery. We believe that all shareholders would tender their shares in such a offer for sale and the NEED FOR IMMIDIATE LISTING and the costs and post listing issues may be avoided for now by the company.
Thus with this option, the shareholders get a fair exit, the company complies with the High court order and the pressure to go for listing eases out at this tough time in the telecom sector. The new investor is not affected by this change.
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Proposal #2
TO OFFER SHARES IN THE SAME PROPORTION TO THE MINORITY SHAREHOLDERS AS THE ALLOTMENT TO THE INDIAN PROMOTERS AS RIGHTS AT PAR.
Though not a preferred option, this proposal will atleast prevent low cost dilution of the minority shareholders by allotting shares to the indian promoters at 10 rs.
The net loss to the company by such allottment to Indian promoters at 10 rs is aproximately 800-900crores ( almost 200 million USD) which translates to approximately 3 rs per share loss to the minority shareholder. This action would tantamount to unfair corporate governance practice that most shareholders would like to challenge. By using Proposal 2, we can eliminate this notional loss and make the shareholders feel at par.
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We believe in fairness and that is all we are asking. We wish very well for the company but not at the cost of getting oppressed. We were told by Mr Rozanov and Mr Sergey that the HIGHEST corporate governance standards will be maintained. We are only asking for the same words to be put in actions.
Regarding the association, it is a small group of some shareholders so far. However, we intend to enroll thousands of shareholders in the next few months in case we don't find the companies' actions to be fair towards the shareholders. We intend to knock on all possible regulatory and legal doors to ensure that our shareholders value is not eroded. However, we surely hope we will not be pushed into that situation.
I request an urgent meeting for discussion of the same. We surely wish an early amicable solution as we wish well to the company.
Convenor
AMSOST
4. Response from SSTL Legal head
Dear Mr. Alok Jain,
We refer to your specific proposals. We have perused the same and our reply to it, without prejudice to one another, is as under:-
Firstly, the issue pertains to the domain of shareholder’s rights, subject to the jurisdictional competence of the Company’s Board of Directors, and not the Company’s rights.
Secondly, your proposals have no correlation with Company’s Board of Directors proposal of preferential allotment of shares / Notice of Extra Ordinary General Meeting dated 31 Oct. 2009 which being an independent and distinct matter, cannot be linked and dealt with in the manner proposed by you.
Thirdly, your proposals purport to suggest alternatives to preferential allotment of shares by the company. As you are aware that the right to take a final decision in the matter of preferential allotment rests with shareholders of the company and as a shareholder you are entitled to participate in deliberations of the general body and present your views to the shareholders.
That apart, without prejudice, we offer the following comments:
Proposal I
The first proposal envisages that the company offers your shares to the incoming investor as a blended offer. While you are welcome to make any offer to anyone, the company, cannot under the Companies Act, 1956 make any such alleged blended offer by including thereunder an offering of your shares and the holding of other shareholders. The proposed action is totally alien to law.
Proposal II
The proposal before the general body is not for allotment on rights basis but for preferential allotment and it would be for the general body to take a final decision after considering all relevant issues and the views that may be expressed by the different shareholders as to what would be in the best interest of the company and the shareholders.
We still await the list of shareholders that your association purports to represent.
With these views, your aforesaid proposal is consigned to records.
Thanking You,
Best regards,
Arkady Kochetkov
Head of Corporate Legal
*****************
We refer to your specific proposals. We have perused the same and our reply to it, without prejudice to one another, is as under:-
Firstly, the issue pertains to the domain of shareholder’s rights, subject to the jurisdictional competence of the Company’s Board of Directors, and not the Company’s rights.
Secondly, your proposals have no correlation with Company’s Board of Directors proposal of preferential allotment of shares / Notice of Extra Ordinary General Meeting dated 31 Oct. 2009 which being an independent and distinct matter, cannot be linked and dealt with in the manner proposed by you.
Thirdly, your proposals purport to suggest alternatives to preferential allotment of shares by the company. As you are aware that the right to take a final decision in the matter of preferential allotment rests with shareholders of the company and as a shareholder you are entitled to participate in deliberations of the general body and present your views to the shareholders.
That apart, without prejudice, we offer the following comments:
Proposal I
The first proposal envisages that the company offers your shares to the incoming investor as a blended offer. While you are welcome to make any offer to anyone, the company, cannot under the Companies Act, 1956 make any such alleged blended offer by including thereunder an offering of your shares and the holding of other shareholders. The proposed action is totally alien to law.
Proposal II
The proposal before the general body is not for allotment on rights basis but for preferential allotment and it would be for the general body to take a final decision after considering all relevant issues and the views that may be expressed by the different shareholders as to what would be in the best interest of the company and the shareholders.
We still await the list of shareholders that your association purports to represent.
With these views, your aforesaid proposal is consigned to records.
Thanking You,
Best regards,
Arkady Kochetkov
Head of Corporate Legal
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