Page 78 - bne IntelliNews Russia Country report May 2017

placement price. Moreover, with the placement, its liquidity will improve. We expect this year to be successful for Etalon sales and its earnings to increase materially. We do not yet have a rating on the company.
Safmar's acquisition of 57.7% of M.Video was completed May 6, initiating the voluntary tender offer to minority shareholders at $7 per share. This will end on 10 July, and shareholders will be paid by the end of July. All 100% of the tendered shares will be bought out. M.Video will continue to trade on Moscow Exchange after the tender offer expires.
Yandex to buy back 20% of its equity. Yandex plans to repurchase Class A shares, amounting to 20% of its equity, Bloomberg reports. The buyback is subject to approval by shareholders at the AGM on 25 May. The company previously announced it would consider distributing cash. Yandex had some $1.1bn of cash and short-term investments on its balance sheet as of 31 March.
TCS Group's shareholders have approved the bank's board of directors' request to buy back up to 10% of its A class shares. Bankers regard this as a technical decision to allow the board more flexibility rather than to commence a near-term buyback. Given that the bank has quite poor liquidity bankers do not think that a buyback is on agenda.
Uralkali may resume buyback if net leverage below 4.0x. According to Bloomberg, the company may resume its buyback, or start paying dividends, if the net debt to EBITDA ratio falls below 4.0x. As of YE16 Uralkali's net debt amounted to $5.5bn, with a net leverage ratio of 4.7x. Separately, according to Vedomosti, Uralkali has postponed commissioning the 2.5mtpa Ust-Yaivinsky potash project from 2020 to 2025 in order to boost free cash flow, and accelerate deleveraging. The company has already invested 40% of the $1.2bn required for the project. U ralkali shares are trading not on fundamentals, but rather on expectations of other buybacks as the company eyes privatisation, in our view. Deleveraging to a 4.0x ratio may take time as the positive effect of the 10% rebound in potash prices has been offset by a stronger RUB.
Etalon improves dividend policy to 50-70% payout ratio. The company's board has increased the dividend payout ratio from 30-50% to 40-70% of consolidated IFRS net income. The dividends will still be paid twice a year based on the half year results. Bankers expect the company's net income for 2017 to be around RUB8.3bn. Therefore, the company may spend up to RUB5.8bn on dividends in 2017, or a DPS of up to RUB20, which implies an approximately 7% dividend yield.
Independent automaker Sollers' Board of Directors has recommended not paying any dividend for 2016. The decision is in line with our expectations, as the company had previously set net debt/EBITDA for the purposes of dividend distributions at 1x, while the actual ratio exceeded this level as of the end of 2016 (1.2x, based on the company's calculations). Nevertheless, analysts believe that following the recent correction, Sollers is attractively valued and represents an interesting opportunity to play the nascent recovery of the Russian auto market, with additional support coming from export opportunities. Moreover, VTBC sees better prospects for dividend distributions in the following years.
78 RUSSIA Country Report May 2017 www.intellinews.com