The legal proceedings of Bashneft and Rosneft with AFK Sistema Vladimir Yevtushenkov unambiguously work to worsen the investment attractiveness of Russia both in the West and in the East. Sassy weaning business, for which the victim then has yet to pay extra for astronomical amounts, anyone will have to think three times before investing money in this mysterious Russia. Not to mention that when the shares of the largest system-forming company collapse as a result of raider actions, this is the worst way affecting not only the external, but also the domestic market. Against this background, the sole optimist is the head of Rosneft Igor Sechin: the trial in the opinion of the chief executive director of the oil monopoly should improve the investment climate. "It's about the transparent responsible behavior of management and shareholders," Sechin said. Let's notice, that the person who before this dispersed edition Forbes and forced publicly to repent ostensibly slanderers from RBC, the official, the salary which is protected more reliable, than any state secret speaks.

170 billion - and less kopeyskoy less

Rosneft and Bashneft, trying to collect 170.6 billion rubles from Sistema, filed a petition with the Bashkir arbitration to secure the claim, followed by a file from the court. On Monday, the petition was granted, AFK Sistema received a copy of the writ of execution and a resolution to arrest 31.76% of MTS shares, 100% of the Medsi group of companies and 90.47% of the shares of the Bashkir Electric Grid Company (BESK), the statement said. ". The bailiff also restricted the right of Sistema and its subsidiaries Sistema Invest to receive dividends from the seized assets, Sistema's spokesman Sergei Kopytov said: the company will appeal both the ruling of the court and the bailiff's decision.

The representative of Rosneft Mikhail Leontiev explained the appearance of the petition by the fact that "the opponents demonstrate all kinds of contemptuous attitude towards legal legal procedures and institutions. Our lawyers offered Sistema assets, which correspond to the size of the claim in value, the court agreed with the assessment. "

The fact that the court granted this petition is extremely atypical, says BMS partner Denis Frolov. In 99% of cases, the court does not arrest the shares in the money dispute, Frolov continues: if the plaintiff wins, he should gain access not to the assets, but only to the money in the accounts.

Where the defendant will take the money to pay, he will sell or pledge assets - his problem. Even more strange seems the arrest of income from shares, says Frolov. Dmitry Peskov, the presidential press secretary, declined to comment on the security measures against Rosneft's suit against Sistema.

Incomplete amount

At the end of 2016 Sistema had 60.2 billion rubles in accounts, MTS had 18.47 billion, and BESK had 1.2 billion. Medsi had not published its accounts, and in 2015 it had 2 accounts , 6 billion, according to SPARK-Interfax. As of December 31, 2016, in the accounts of Detsky Mir, according to the retailer, there were almost 2.5 billion. In total, it amounted to 84.97 billion rubles, or 49.8% of the claims.

Not the fact that the funds on Sistema's balance sheet are actually on the accounts of Russian banks, the procedure for their arrest can be complicated, Ivan Tertychnyy, partner of Tertychny Agabalyan, believes. "The arrest of Sistema's shares is a way to guarantee the execution of the court's decision to collect money, if it is accepted. After the issuance of the writ of execution, these shares will be sold at public auction, and the proceeds will be used to repay the debt, "Tertychny said.

The arrest of MTS shares is not the last interim measure for the lawsuit filed by Rosneft against AFK Sistema, says Mikhail Leontiev. According to him, the oil company asked to arrest the assets for the full amount of the claims. The decision of the court to seize assets in Rosneft is considered fair, Leontyev stressed. "Therefore, MTS is not their last arrested asset," said Leontiev RBC. He also added that, according to Rosneft, AFK Sistema "contemptuously refers to the court". Leontyev said that Rosneft is not interested in "extra-judicial compromises" in the case.

MTS will go under the hammer

MTS is Sistema's largest asset, it brought in 50% of consolidated revenues in 2016, Mikhail Szamolin, the president of Sistema, told Vedomosti. The arrest of shares does not hamper operations, said MTS representative Dmitry Solodovnikov, and will not have an impact on transactions with MTS shares, nor on dividends on its shares held by other shareholders.

The capitalization of MTS is about 480 billion rubles, the arrested package is worth 152 billion rubles. "Sistema" can not conduct transactions with these securities, but it is unlikely that it was going to sell such a package, said Raiffeisenbank analyst Sergey Libin: "Sistema" can dispose of and receive dividends from 19.35% of MTS shares.

In 2016-2019, the company promised shareholders 25-26 rubles a year per share, the total dividend - 50-52 billion rubles a year, without the arrested shares, "System" will receive 9.6 billion rubles. Does MTS allow a higher dividend, the operator's representative does not say. To abuse the right of the owner in terms of dividends, loans, other ways to withdraw the assets of the "System" no one will give, says analyst "Discovery Broker" Timur Nigmatullin.

Libin doubts that in connection with the claim of Rosneft, MTS will sharply increase the payment of dividends: MTS already pays shareholders almost 100% of free cash flow.

What Sechin thought of

Do not forget that Sistema has partners around the world - from China to France, which can also suffer from Rosneft's lawsuits. So, AFK Sistema owns 85% of the shares of GC Steppe, a major producer of cereals, milk, fruit and vegetables, and a half - in RZ Agro, the partners of the corporation are members of the French family Louis-Dreyfus. Together "Steppe" and RZ Agro control over 350 thousand hectares, this is the 9th place among the latifundists of Russia (list BEFL). In 2016, the proceeds of the agricultural holding "Steppe" (including 50% of the shares of RZ Agro) grew threefold - to 8.4 billion rubles, net profit - 871 million rubles.

Sistema said a lot about Steppe's IPO in the coming year: as the vice president of Sistema, Ali Uzden, told us, the members of the Louis-Dreyfus family were to become shareholders of the Steppe through the conversion of their stake in RZ Agro. In early June, Kirill Dmitriev (the same general director of the RFPI, which led to a scandal inside the American broadcasting corporation CNN) said that he was thinking of entering into the capital of the Steppe.

Director of the Institute for Agricultural Market Studies Dmitry Rylko believes that the preparation for the IPO can take another year, by that time the situation with the claim and the arrest of accounts will clear up, so adjust the plans are not worth it.

Another asset of Sistema is the largest seller of goods for children in Russia, Detsky Mir, as of March 31, it has 52.1% of the retailer; In the first quarter of 2017 was the primary placement, for which the retailer was estimated at 63 billion rubles, on Monday its capitalization on the Moscow Stock Exchange - 73.15 billion rubles. Among the partners of Sistema in the Children's World - the Russian-Chinese investment fund (RFPI and CIC) with a share of about 13%. At the end of May, the Board of Directors of Detsky Mir recommended paying 2.6 billion rubles in dividends for 2016, which is 68% of net profit.
 
A well-known medical fact

In October 2015, Sistema consolidated 100% of Medsi's shares, having bought 25% from the State Medical Center of the Moscow Mayor and Government Administration, the deal amounted to 6.1 billion rubles, that is, the company was valued at 24, 48 billion rubles. Taking into account the growth of business at the end of 2016, the whole Medsi could cost at least 30 billion rubles, analyst of BCS Global Markets Marat Ibragimov said. In 2016, Medsi's revenue increased by 14.4% to 9 billion rubles, OIBDA - by 72.4% to 813 million, net loss - 499 million rubles.

In February 2017, a Medsi representative confirmed plans to build a high-tech clinic on Michurinsky Prospekt: the group discussed options for cooperation with international partners. Most likely, Medsi attracts investors for specific projects, Ibrahimov argues, the arrest of shares does not mean a ban on attracting additional financing, but will make it difficult for investors to search. The Medsi representative declined to comment. Medsi and BESK are non-public companies, in the aggregate their packages are valued at the remaining 18 billion rubles, Libin concludes.

We sum up the results

On Monday, the Moscow Stock Exchange shares of Sistema fell by 7.14% (MICEX index fell by 0.38%), capitalization fell by 9.7 billion rubles On the London Stock Exchange, Sistema lost 6.66% (and the FTSE index Russia IOB decreased by 0.64%), capitalization decreased by $ 152 million. Yesterday at 21.38 Moscow time, the value of MTS depositary receipts on the NYSE dropped 4.2 ppts to $ 8.38 per share.

Since the consequences of the arrest of shares in the law are not prescribed, the possibility of paying dividends on the arrested shares depends on the wording of the ruling on the imposition of arrest, as well as on the discretion of the bailiff and the particular court, says Dmitry Konstantinov, a lawyer of Ilyashev and Partners, but the defendant will appeal the bailiff's decision Prohibition of dividend payment for longer than the main case will be considered, therefore, apparently, it will not be possible to receive dividends on the arrested shares of Sistema.

Unfortunately, tens of thousands of shareholders of Sistema and MTS have already suffered losses of more than 150 billion rubles, said Kopytov, and after taking interim measures, their losses are likely to increase significantly. This is especially outrageous because the trial concerns generally applicable corporate actions that were carried out openly and publicly in 2014 and have never been challenged by anybody, he states. These measures, like the entire lawsuit, are not a consequence of the desire to establish the truth in the course of the trial, but Kopytov continues another attempt to exert unprecedented pressure on our company: claims of the plaintiff are groundless, nevertheless the company has enough opportunities to execute even the most unfavorable decision Court, therefore we perceive the taken measures of providing only as another manifestation of the absurdity of what is happening.

Why Sechinsky whim?

After the report on the seizure of assets, quotations of securities of Sistema and MTS quickly collapsed. In London, the receipts of Sistema by 20:45 Moscow time have fallen in price by 6.66%. Capitalization was $ 2.13 billion. MTS shares on the New York Stock Exchange fell by 4.66% (at 20:50 Moscow time), capitalization fell to $ 8.49 billion.

On the Moscow stock exchange at the time of the announcement of the seizure of assets, the trading session has already ended. On June 26, the arrested stake in MTS was worth 151.7 billion rubles.

Last Tuesday, June 20, the Arbitration Court of Bashkiria filed a petition allegedly from Rosneft and Bashneft to refuse a claim against Sistema in connection with the conclusion of a settlement agreement. The notice of registration of the application appeared on the website of the filing cabinet of arbitration cases. This led to a rapid growth in the value of shares of AFK Sistema, the paper holding, controlled by billionaire Vladimir Yevtushenkov, went up by 18 percent. A few minutes after the announcement, Rosneft denied the information about the refusal of the claim.