Moscow, Russia – 28 August 2017– Sistema PJSFC (“Sistema” or “the Corporation”) (LSE: SSA, MOEX: AFKS), a publicly traded diversified Russian holding company, announces that on 28 August 2017 a technical default occurred on credit obligations of the Corporation amounting to the equivalent of RUB 8.9 billion.
The technical default took place due to the ongoing arrest of shares of MTS, Medsi and Bashkirian Power Grid Company owned by the Corporation and Sistema-Invest. The arrest was imposed by the Republic of Bashkortostan Arbitration Court as part of legal proceedings initiated by Rosneft, Bashneft and the Republic of Bashkortostan against Sistema and Sistema-Invest. Other than the credit obligations disclosed earlier and mentioned above, the Corporation’s remaining loan agreements do not contain a condition whereby this arrest of shares will lead to a technical default.
In accordance with market practice Sistema asked lenders to provide waivers in connection with the event of technical default.
Sistema stresses that the non-compliance with certain conditions of some of its credit facilities that triggered the technical default is driven exclusively by the arrest of the above-mentioned assets and is purely formal in nature. Sistema continues to service its credit and financial obligations on time and in full, and plans to continue doing so in the future.
Sistema believes that the arrest of its assets is unfounded, and continues to take necessary steps to have the arrest lifted. To this end the Corporation has filed an appeal with the 18th Arbitration Court.
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