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outstanding). We flag that the amount of actually paid pre-emptive rights may be substantially less than submitted and see this as the most likely scenario
Upon the collection of pre-emptive rights application, the company initiated a book building procedure for RUB39bn (equals 568mn shares at a price as of the close on Friday, 2 October). Aeroflot targets to raise RUB80bn+ from the placement including pre-emptive rights. Previously, government representatives indicated that the state‘s stake in Aeroflot shall be kept at least flat as a result of the placement
According to Bloomberg, citing 2 unnamed sources, the book was covered on Friday after market close
Size of placement in RUB80-106bn range. If one assumes that 100% of pre-emptive rights are executed, the total size of the placement may reach up to RUB106bn (or 1.5bn shares) at the closing price on Friday. Hence, in theory, the range for the placement is RUB80-106bn. We believe the size of the placement is most likely closer to the minimum of RUB80bn. Successful book building implies lower injection of government funds, we believe.
The proceeds should be sufficient to cover the major part of bank loans originated since beg-2020, allowing the company to avoid additional costs on debt servicing. Such a significant capital injection will give a strong competitive edge to grow market share and move closer to the company’s ambitious targets, which imply 130mn PAX by 2028 vs 60.7mn carried in 2019. Aeroflot trades with a 4.3x EV/EBITDA – we see current levels as attractive and believe the stock should return upside on a 12M+ investment horizon.
On Friday, 9 October, M obile TeleSystems (MTS) reported that it had acquired another 1,315,462 of its own shares from the open market, representing 0.07% of its share capital. This is in addition to the announcement on 5 October that MTS had bought 4,891,383 shares from Sistema Finance. As a reminder, under the buyback’s structure, the number of shares MTS acquires from Sistema on a monthly basis is based on the number of shares the company bought on the open market the previous month pro-rata to Sistema's effective equity stake in MTS.
Polyus Gold has increased its share in the Sukhoi Log (SL) project from 78% to 100%, exercising its right to accelerate the buyout of LLC RT Business Development’s participation interest in the project. The company had already planned to increase its share in SL to 100% by the end of 2020, so this means it has finished the process slightly early. However, the news is neutral, in our view.
Polymetal could be admitted to GDX after the US elections, CEO Vitaly
99 RUSSIA Country Report November 2020 www.intellinews.com
