OAO Rostelecom, Russia’s state-run phone company, may sell about $490 million worth of treasury stock to investors help cut debt which surged under previous management, Chief Executive Officer Sergey Kalugin said.
Kalugin, speaking to reporters today in Moscow, said he is “concerned” with the company’s high debt level of about $6.9 billion and that selling treasury shares is one option to reduce it. The sale may happen this year and Rostelecom is in talks with investment funds about a private placement, he said.
The phone carrier, based in Moscow, is trying to cut costs and boost efficiency after Kalugin in March replaced Alexander Provotorov whose spending had been criticized by the government. Net debt rose 70 percent in the two years through 2012.
The stock Rostelecom may sell, a stake of about 4.6 percent, is currently held by the company’s Mobitel unit. The stake is worth about $490 million based on today’s trading.
Rostelecom had borrowed money to buy the shares from billionaire Suleiman Kerimov and minority shareholders earlier, Kalugin said.
Shares of Rostelecom fell 0.8 percent to 112.88 rubles at 4:13 p.m. in Moscow.
Kalugin said he is seeking to reduce the cost of purchases and administrative personnel. Rostelecom hasn’t held talks about buying mobile carrier Tele2 Russia from state-run lender VTB, Kalugin said. VTB may sell the asset to Rostelecom to create a larger phone carrier, Renaissance Capital has said.
To contact the reporter on this story: Ilya Khrennikov in Moscow at firstname.lastname@example.org