Russia's Mobile TeleSystems tenders for 8% eurobonds, seeks consents for 8 5/8% eurobonds

By Susanna Moon

Chicago, Jan. 24 - Mobile TeleSystems OJSC said it began a tender offer for the $400 million of 8% senior eurobonds due Jan. 28, 2012 issued by Mobile TeleSystems Finance SA.

The company also is soliciting consents to amend the bonds to eliminate substantially all of the restrictive covenants, events of default and conditions to legal defeasance.

The purpose of the consent bid is to remove an event of default that might arise as a result of an arbitral award in favor of Nomihold Securities Inc. against the issuer and to modify the bonds to avoid a future event of default arising as a result of the award, according to a company press release.

Holders cannot tender their bonds without delivering consents.

The adoption of the amendments requires consents from the holders of a majority of the bonds.

The total payment is $2,135 for each $2,000 principal amount of bonds, including a consent payment of $20, for bonds tendered by Feb. 4, the consent date.

Holders who tender after the consent date but by the expiration time of 5 p.m. ET on Feb. 23 will receive $2,115 for each $2,000 principal amount.

Consent bid for 8 5/8% bonds

MTS International Funding Ltd. also began a consent solicitation for its $750 million of 8 5/8% senior eurobonds due June 2020, according to a separate press release by Mobile TeleSystems.

The company also is seeking consents to remove an event of default that might arise as a result of an arbitral award in favor of Nomihold.

The early instruction deadline for submission of electronic voting instructions for the 8 5/8% eurobonds is 10 a.m. ET on Feb. 9. The final voting deadline is 10 a.m. ET on Feb. 11, and a meeting of bondholders will be held Feb. 15.

If the resolution passes, the issuer will pay an early instruction fee of $2.50 for each $1,000 principal amount for holders who vote in favor of the measure before the early deadline by delivering their electronic voting instructions. The late instruction fee is $1.00 per $1,000 principal amount for those who vote for the measure by the final instruction deadline.

The resolution requires a majority vote of at least three-quarters of the votes cast at the meeting. Any resolution will be binding upon all bondholders. Holders may vote electronically or by attending the meeting.

The dealer manager for the tender offer and for both consent solicitations is Royal Bank of Scotland (+44 20 7085 8056, 203 897-6145 or liabilitymangement@rbs.com). The tender agent and tabulation agent is Bank of New York Mellon (+44 20 7964 4958 or eventsadmin@bnymellon.com).

The telecommunications provider is based in Moscow.

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