Ukrainian telecoms investors in $820m dispute in Cyprus court

Alan Burkitt-Gray
Published on:

Court freezes assets of businessman who bought Ukrtelecom in 2013 for $860m

The future of Ukraine’s fixed-line operator Ukrtelecom is in question after a court in Cyprus froze $820 million worth of the assets of businessman Rinat Akhmetov.

The case was brought by Raga Establishment, owned by Ukrainian banker Denis Gorbunenko, which says it sold Ukrtelecom to Akhmetov in 2013 for $860 million, but adds that it has received only $100 million so far.

According to often-quoted sources, Akhmetov is said to be Ukraine’s richest person. Forbes magazine said in 2017 that he is worth $4.6 billion.

The court order, issued on 29 December 2017 but only just revealed by Raga, says Akhmetov can dispose of assets but has to ensure he retains at least $820 million or the equivalent in euro. He is also allowed up to €20,000 a month for legal costs and a further €20,000 a month for living costs.

Raga has been in dispute with Akhmetov over the future of Ukrtelecom for some time. In June 2017 the company won an award against an Akhmetov company, SCM Financial Overseas, in the London Court of International Arbitration. SCM was ordered to return the shares to Raga.

Ukrtelecom says on its website that it is “part of the SCM group” – SCM standing for System Capital Management.

The Cyprus decision, in the District Court of Nicosia, prevents Akhmetov as well as associates, employees and others from disposing of the assets, either inside or outside Cyprus, including “every company or other entity”. The order names Akhmetov plus three other individuals and six companies.

The order includes not only Ukrtelecom but also Akhmetov’s other assets, including a football team in Ukraine and property in London.

Ukrtelecom was owned by the Ukrainian state until 2011 when it sold 92.79% for the equivalent of $1.3 billion to a private equity investor based in Austria, Epic Financial Consulting. The deal included what was then Ukraine’s only 3G company. Two years later Epic sold its interest to Akhmetov.

However, according to Ukrainian media, Raga Establishment was formerly Epic Telecom Invest and it bought Ukrtelecom from pic Financial Consulting and then sold it on to Akhmetov in 2013 for $860 million.