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. Last Updated: 07/27/2016

RTS Halts Trade of MGTS Shares




The Russian Trading System announced Monday it had suspended common and preferred shares of Moscow City Telephone Network, or MGTS, in a routine move coinciding with the company's placement of new issues under a share split, Renaissance Capital investment bank said in a daily report.


MGTS, which announced the move last October, said it would convert its 1,596,584 common shares and 319,317 preferred shares with a nominal par value of 1,000 rubles ($34.55) into 79,829,200 common shares and 15,965,850 preferred shares with a par value of 20 rubles (69 cents), Renaissance Capital reported.


The company's shareholder structure will remain unchange d. Shareholders will receive 50 shares for each share they hold. MGTS common shares closed at $511.17 on the RTS on Friday, while preferred shares were listed at $137.15.


The move is aimed at increasing the liquidity of MGTS stock. Analysts saw it as a positive step despite shareholder resentment over a previous dilution in early 1998 in which holding AFK Sistema, which has close ties to the Moscow city government, was allowed to acquire a stake in the company at 17 cents a share instead of the $900 a share market price.


Andrei Bogdanov, a telecommunications analyst at Alfa Bank, said the pending share split would be relatively easy and was long overdue. "Share prices were too high for small investors to have access," he said. "As a result, liquidity was too low.


"No other telecom company has such high share prices," he added. MGTS shares trade at around $500, Bogdanov said, down from an all-time high of $2,800 in August 1997.


Trading of MGTS shares on the RTS will resume after the Federal Securities Commission releases a report on the share split.


"According to Russian law, a company cannot trade on the RTS without having registered the results of a new emission with the FSC," said Dmitry Bobrov, acting head of the RTS listing department.


MGTS has 30 days to submit an evaluation of its stock swap to the FSC, after which the commission has two weeks to rule on whether it finds the results acceptable, Bobrov said.


Bogdanov said the suspension should have no effect on the company's share value.


RTS last suspended shares for the same reason on March 1, when the Komi republic telecom Svyaz Respubliki Komi undertook a stock split. Shares were reinstated on the RTS on April 6.