June 27, 2017 / 3:37 PM / 2 years ago

Russian court freezes $3 billion of Sistema assets in Rosneft case

MOSCOW (Reuters) - A Russian court said on Tuesday it had frozen more than $3 billion of Sistema’s (SSAq.L) (AFKS.MM) assets as it began hearing oil producer Rosneft’s (ROSN.MM) lawsuit against the business conglomerate.

The logo of Russian conglomerate Sistema is seen on a board at the St. Petersburg International Economic Forum 2017 (SPIEF 2017) in St. Petersburg, Russia, June 1, 2017. Picture taken June 1, 2017. REUTERS/Sergei Karpukhin

Rosneft is suing Sistema for 170.6 billion roubles in damages following its purchase of oil producer Bashneft (BANE.MM) last year. Rosneft has alleged that certain assets were removed from Bashneft, while Sistema has rejected these claims as groundless.

Sistema, majority owned by businessman Vladimir Evtushenkov, said earlier the court had frozen part of its 50 percent stake in telecoms company MTS (MBT.N) and its holdings in two more businesses as part of the legal dispute with Rosneft.

The value of Sistema’s frozen assets is 185 billion roubles ($3.14 billion), an order issued by the arbitration court of the Russian region of Bashkortostan showed on Tuesday after the court held the first hearing in the case.

Sistema said it would file an appeal. Rosneft, in which the Russian state has a controlling stake, declined to comment.

The court will continue hearing the case on July 12, Russian news agencies reported.

The dispute between Sistema and Rosneft has echoes of a situation in 2014 involving Sistema, when the Russian government seized Sistema’s stake in Bashneft, saying Bashneft’s privatization had been illegal.

Sistema said on Monday that in addition to the freeze on 31.76 percent of MTS, 90.47 percent of Bashkirian Power Grid company and its wholly-owned Medsi medical clinics chain, it could not receive any income on those shares.

As a result it could miss out on about 15 billion roubles in dividends from subsidiaries this year, potentially limiting its scope for acquisitions, according to analyst estimates.

Shares in Sistema slumped by as much as 17 percent early on Tuesday but later pared some losses to trade about 6 percent lower by 1430 GMT.

VTB analysts estimated Sistema would only get about 8.5 billion roubles from MTS this year, down from 23 billion in 2016. Raiffeisenbank analysts put the overall dividend shortfall for Sistema at 15 billion roubles or more.

“It would not hurt Sistema’s ability to service its debt or fund its operational activity, but could restrict its freedom when it comes to mergers and acquisitions,” Raiffeisenbank analyst Sergey Libin said.

Sistema said earlier this year that it was looking to boost its land bank as it expands in farming with a view to listing its agricultural business in the next few years.

Reporting by Maria Kiselyova, Anastasia Teterevleva, Anastasia Lyrchikova and Vladimir Soldatkin; editing by David Clarke and Jane Merriman

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