Golden Telecom (GT) said the document set out the terms for a deal with Dawn Key Limited, which controls 71.11% in Cyprus-based Inure Enterprises Ltd. The latter company holds 99% in Cortec, Corbina's owner. Inure is co-owned by financier Alexander Mamut and Renova Capital, which belongs to aluminum and oil tycoon Viktor Vekselberg.
"In view of the current trend of telecom sector consolidation in Russia, we have decided to consolidate our forces with Golden Telecom, and hope this will be a good basis for more ambitious plans," Mamut said.
According to the term sheet, GT will gain a controlling stake in Cortec and its subsidiaries in exchange for $10 million, and additional GT shares expected to equal the value of 8% of the total shares on the day the deal is to be closed.
"The transaction is subject to approval by the appropriate regulatory bodies in the United States and Russia, and execution and consummation of an ownership interest purchase agreement," a statement on the GT Web site said.
Golden Telecom Chief Executive Jean-Pierre Vandromme said the acquisition would resolve the "last mile" connection problem in Moscow and give the company access to nearly every building in the city.
Corbina co-owner Mamut also praised the deal. "We plan to play a proactive role both on Corbina's board of directors, and as a shareholder of Golden Telecom," he said.
Founded in 1995, Corbina is a leading broadband Internet service provider, which already covers 2.4 million households among Moscow's population of 11 million and has expanded to 24 Russian provinces. The company expects its earnings to hit $90 million this year.
Following the announcement of the deal, GT said in a news release that Corbina would hold an IPO by the end of 2008.
"Considering the vast development potential of this business, both companies have agreed to hold an IPO for Corbina in Moscow, London or New York by the end of 2008, depending on the market situation and permission from regulators," the news release said.
Golden Telecom provides integrated telecommunications and Internet services in the major cities of Russia and other former Soviet nations. Its major shareholders are Altimo (29%), Telenor (20%), and Rostelecom (11%).
