MOSCOW Russia's second biggest mobile phone operator Megafon has finalized its 2012 deal to buy a stake in cellphone retailer Euroset, paying its key shareholder $657.3 million in shares, the company said on Wednesday.
Megafon, controlled by Russia's richest man Alisher Usmanov, together with his acquisition vehicle Garsdale, bought 50 percent of Euroset for $1.07 billion nearly two years ago. The other 50 percent in Euroset belongs to Megafon's competitor, Vimpelcom.
The initial deal envisaged Megafon gaining full control of the Euroset stake within a year, buying 25 percent from Garsdale within a year. The condition was later extended until 2015.
The price paid in the deal corresponded to the $535 million initial investment plus $50 million in additional payments representing Garsdale's "earn out", as well as accumulated 8 percent interest, Megafon said.
"Megafon has completed its commitment to Garsdale with respect to the Euroset transaction at this time in order to eliminate a sizeable foreign currency liability from the company's balance sheet and reduce the average cost of our debt," Megafon Chief Executive Ivan Tavrin said in a statement.
"We used our treasury shares instead of cash as the currency of payment to retain adequate liquidity position in volatile credit market environment."
(Additional reporting by Alexei Kalmykov; Writing by Lidia Kelly, editing by David Evans)