STOCKHOLM, Dec 9 (Reuters) - Vostok Gas VGASsdb.ST said on Tuesday it had called an emergency general meeting to approve the distribution of all Gazprom Depository Receipts to its shareholders after outstanding bank debts are repaid.
Vostok had been set up as a holding company for Gazprom ADRs but market volatility meant this was no longer attractive, it said.
“The current bank debt with Deutsche Bank (DBKGn.DE) will be repaid in full before the Gazprom ADRs are distributed to the shareholders of Vostok Gas,” the company said in a statement.
“Vostok Gas management still believes Gazprom to be significantly undervalued at today’s levels. This was also the belief that led the company to apply the initial leverage,” it said.
“However the present global financial turmoil makes it practically impossible to apply leverage to a position like the one of Gazprom ADRs in Vostok Gas.”
Long-term credit was not available at practically any price and extreme volatility made short-term debt “destructive” to a large position such as Vostok Gas’s in Gazprom, the firm said.
“All in all the reasons for holding Gazprom through Vostok Gas has been diluted to the extent that it no longer is in the interest of the shareholders to maintain its exposure through the company.” (Editing by Hans Peters)