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programme worth $30mn , the company said on September 11. TMK will run the buyback in 2018-2019, moving GDRs from freefloat to its treasury stock. In 2017 TMK held an SPO, selling 13.44% of its shares for RUB10.4bn ($150mn), and has also been trying to IPO its US division IPSCO despite unfavourable market conditions. The Russian division of TMK is driving positive performance, with growth in shipments posted in the second quarter and strong financial indicators in the first quarter . In the first quarter TMK reported 6% quarter-on-quarter revenue growth to $1.27bn and 5% q/q Ebitda growth to $160mn, both beating consensus expectations by 5%. Higher revenues and earnings in the reporting quarter were attributed to the strong performance in the Russian division, supported by stronger prices and an improved seamless pipe product mix, thanks to seasonally higher consumption for oil and gas producers, Aton Equity commented on the first-quarter results on May 20.
Russian billionaire and CEO metals major Norilsk Nickel Vladimir Potanin returned the 2% stake in the company to another shareholder of NorNickel London-based tycoon Roman Abramovich , Reuters said on September 10 citing unnamed sources. NorNickel recently saw a the flare up of an old shareholder conflict between Interros of Vladimir Potanin, Rusal’s Oleg Deripaska, and Abramovich's and Abramov's Crispian. In June the London High Court resolved the case in favour of Oleg Deripaska , ruling that Abramovich breached the shareholder agreement when selling 2.1% stake in NorNickel to Potanin. After the deal, Interros increased its stake in the company to 32.9%, with Rusal owning 27.8%, but now the deal's reversal has been completed, according to Reuters. Previous reports suggested that the breach of the shareholder agreement by Potanin and Abramovich could give Deripaska's Rusal, as the damaged party, the right to acquire a 7.5% stake in Norilsk Nickel with 25% discount, or buy 1.875% of Norilsk Nickel shares for $1 (current market price of RUB33bn or about $0.5bn). Analysts previously also commented that now Crispian will have to return the $750mn raised from selling 2.1% Norilsk Nickel state to Interros, and doubted that Abramovich's company will now be able to find other buyers to the shares with such a high premium. Norilsk Nickel is one of the most attractive dividend stories in Russian metals universe , paying $2.1bn in total for 2017. Cash flow and dividend policy was in the heart of the conflict between Deripaska and Potanin, with the latter wanting to lower dividends in favour of growth . Potanin's Interros might seek to increase its stake in Norilsk Nickel by buying shares from open market, Aton Equity argued on June 28. Unconfirmed reports claimed that Interros recently bought 1.5-1.6% from the market bringing its stake to 34%.
8.5 Fixed income
Russia’s domestic debt – the OFZ treasury bills – are under pressure as
foreigners pull out of the market ahead of possible “crushing” sanctions that could be imposed on Russia this autumn . The Russian Finance Ministry has called on for investors not to panic and has even suggested that it will buy back the debt if the US carries through on threats to ban US investors from holding or trading Russian debt entire, writes finanz.ru . The momentum of the sell off gathered pace in the last week. The price of Russian government bonds has fallen for four consecutive days, and the ruble exchange rate is approaching RUB70 per dollar – a two year low. The Russian Government Bond Index (RGBI) reached its lowest point since July 2016, losing 2.19 pp over the last of the week alone. The last time the market saw such a rapid drop
80 RUSSIA Country Report October 2018 www.intellinews.com