August 30, 2017 / 10:15 AM / a year ago

Sistema says businesses operating normally despite court order

MOSCOW, Aug 30 (Reuters) - Russian conglomerate Sistema said on Wednesday that the operation of its businesses has not been affected by last week’s court order for it to pay over 136 billion roubles ($2 billion) in damages to oil giant Rosneft and that its financial position remained solid.

Last week the court in the Russian region of Bashkortostan ruled that Sistema should pay Rosneft 136.3 billion roubles in settlement of Rosneft’s claim that oil producer Bashneft , which it now controls, had been stripped of assets under Sistema’s previous ownership.

Sistema is already contesting the freezing of some of its assets by the court and plans to appeal against last week’s ruling.

“Sistema maintains full transparency around the case and will do everything in its power to contribute to a fair court decision and minimise any negative consequences of the claim for the company and all its stakeholders,” it said in a statement.

It also said it did not expect any creditors to demand early repayments following technical defaults which occurred on 12.8 billion roubles of debt after the asset freeze triggered the breach of certain credit agreement conditions.

The company’s cash position stood at 36.2 billion roubles as of June 30 and it said it planned to continue servicing its credit and financial obligations on time and in full.

“In the third quarter our liquidity remained strong as we continued to receive dividends from portfolio companies and to monetise our investments,” said Chief Financial Officer Vsevolod Rozanov.

Earlier on Wednesday Sistema reported an 8.1 percent rise in underlying second-quarter operating income before depreciation and amortisation (OIBDA) to 48.6 billion roubles on revenue down 0.6 percent at 167.4 billion roubles.

OIBDA was up thanks to a rise in profits at telecoms network operator Mobile TeleSystems, an asset revaluation at its agricultural unit, Steppe, and lower bad debt provisions at MTS Bank.

However, it also reported an adjusted net loss of 799 million roubles due to the revaluation of debt denominated in foreign currencies, while the year-earlier adjusted loss was 103 million roubles.

More than half of Sistema’s 50 percent stake in MTS, which accounts for over 60 percent of its total revenues, has been frozen by the court, along with medical clinics operator Medsi and Bashkirian Power Grid Company. ($1 = 58.6825 roubles) (Reporting by Maria Kiselyova; Editing by Greg Mahlich)

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