Mobile TeleSystems Says Parent Company Sistema’s Technical Default on Credit Obligations Has no Impact

Mobile TeleSystems PJSC (MBT) American depository shares were higher nearly 2% on Tuesday after the telecommunications provider said that its parent company Sistema PGSFC’s technical default on credit obligations does not impede MTS’ operational activities or debt instruments.

Sistema, which owns 50.03% of MTS, declared that as of Aug. 28, a technical default occurred on credit obligations amounting to approximately RUB8.9 billion ($152 million).

“According to Sistema PJSFC, non-compliance with certain conditions of some of its credit facilities, which triggered the technical default, is driven exclusively by the arrest of the assets within the legal claim of Rosneft PJSC and Bashneft PJSOC with the Republic of Bashkortostan against Sistema PJSFC and its subsidiary Sistema-Invest JSC,” MTS said in a regulatory filing. “Other than the credit obligations disclosed earlier and mentioned above, Sistema PJSFC remaining loan agreements do not contain a condition whereby this arrest of shares will lead to a technical default. The technical default is purely formal in nature. Sistema PJSFC is servicing its credit and financial obligations in a timely manner and in full, and plans to continue doing so in the future.”

By Stephen Holmes