State Corporation Rostec is considering the sale of its controling stake in smartphone manufacturer Yota Devices. The Corporation entered into a put option to sell the shares to Winston Sie, the new Chairman of the Board of Directors of Yota Devices and shareholder of the China Baoli, the Chinese co-owner of the company. This follows from the statement of shareholders from the British Virgin Islands (BVI) registrar of companies.
In 2013 the shareholders of Yota Devices were: 64.9% of shares – Telconet fund, which was founded by Russian investors – Sergey Adoniev and Albert Avdalyan, 25.1% – State Corporation “Rostec”, the remaining 10% – offshore MTH which belonged to the former head of Yota Devices Vladislav Martynov.
At the end of 2015 Telconet agreed to sell its stake in Yota Devices to the Chinese Corporation Rex Global (current name – China Baoli) for $100 million.
In the spring of 2016, the parameters of the deal were changed: Telconet sold to Chinese company a 30% stake in Yota Devices, for $46.2 million, remaining the owner of 34.9% of the shares.
Yota Devices assets are divided between two offshore companies with the same name Yota, registered in Cyprus and the British Virgin Islands. For this deal the existing offshore companies were put under head structure – a new offshore company called Yota, registered in the Cayman Islands.
Rostec owns a 25.1% stake in Yota (Cayman Islands) offshore using Yota Devices registered in the BVI. At the end of 2015 Yota Holdings entered into put option for sale of its stake in Yota (Cayman Islands) to Trinity World Managment (TWM), which is registered in BVI. The put option means that the “daughter” of “Rostec” (Yota Holdings) may require its counterparty to buy its stake in the company Yota. According to the extract from the registry of the British Virgin Islands, under guarantee of fulfilment of it obligations TWM provided the Yota Holding company (“daughter” of “Rostec”) a deposit in the form of a 99% stake in the company called Ocean Yield Global.
TWC is owned by another offshore company of BVI called Sino Advisor International. According to the purchase agreement of shares in Yota Devices between Telconet and China Baoli, offshore Sino International Advisor owns a 8.8% stake in the Chinese corporation. The ultimate beneficial owner of the offshore company is Winston Sie who owns 9.8% of shares of China Baoli.
After China Baoli became shareholder of Yota Devices, Winston Sie became the Chairman of the Board of Directors of the smartphone maker. Thus, while China Baoli was buying Telconet stake in Yota Devices, Rostec had the opportunity to sell its stake in Yota Devices to the co-owner of the China Baoli Winston Sie.
“Rostec” confirmed the existence of a put option to sell its stake in Yota Devices, but said that it is not yet the intention of the Corporation to sell the package. “The option in this case is a condition of agreements with Chinese partners and is the so-called protection from the risks of the project, – as explained in press service of “Rostec”. – The decision to implement the option is our decision and does not obligate us to sell the shares.”
Associated with Vladislav Martynov offshore MTH also has a put option with TWC for sale of 10% stake in Yota Devices.
After China Baoli became co-owner of Yota Devices there were some disagreements between the Chinese Corporation and Russian top management.
The development of YotaPhone was transferred from Russia to China. In addition, Yota Devices had exited from a previously signed agreement with the Chinese ZTE for the production of smartphones, and instead created a joint venture with another Chinese company Coolpad, part of the LeeCo holding. After that, Vladislav Martynov and other top managers of Yota Devices left the company.
In the spring of this year, the head of Rostec Sergey Chemezov reported problems with the release of new smartphone – YotaPhone 3, developed by the Russian team. In the summer Yota Devices again announced a new version of the YotaPhone 3, but this model has been completely developed in China.