Page 92 - RusRPTJun19

number of Russian companies have announced deals including Polyus Gold which raised $390mn from a placement. However, the SPO by meat major Cherkizovo has failed, as reported by bne IntelliNews, while and rail operator RusTransCom that announced IPO plans later called off the offering. HeadHunter, however, enjoyed high demand, with the book for the IPO oversubscribed more than 10-fold, according to Kommersant daily. The shares of the HeadHunter were sold by the Highworld Investments (59.99% of the shares), ELQ Investors VIII (investment division of Goldman Sachs Group, holds 40%), selling 9.8mn and 6.5mn of ADRs (American Depository Receipts) and raising $132mn and $88mn from the IPO, respectively.
Russian steel group and major pipe maker TMK postponed plans to SPO a 59.4% stake in its Romanian subsidiary TMK Artrom on the Bucharest bourse, Reuters reported on May 8 citing an announcement by TMK Artom. After cashing in with the sale of 100% of its US subsidiary IPSCO Tubulars for $1.2bn, TMK said it will be spending €62.3mn from the sale in TMK Artom to subscribe to new shares in the same subsidiary. However, due to unfavourable market conditions the deal has been postponed, a TMK representative told Reuters. TMK Artrom makes 16% of steel pipes in Europe and 4.9% in North America, The sale of IPSCO was welcomed by the analysts, as TMK planned to raise $465mn-535mn from the deal, but raised double the amount of $939mn (minus the $270mn working capital), although Tenaris got the US division with a discount. BCS Global Market estimates that TMK’s net debt of about $2.4bn and interest payments of $250mn may fall by about 50% after the deal, if the company uses the cash raised to repay debt. Analysts surveyed by Vedomosti daily estimated net debt to Ebitda dropping from 3.7x to 2.9x. "The only risk we see – if the management decides to spend cash not for debt repayments, but for M&A or something different. But, we see very low risk that this may happen," Oleg Petropavlovsky of BCS GM argues. In the meantime TMK could become the strongest dividend story in M&M, as company’s free cash flow (after interest) is estimated at $150mn-200mn after the deal, making a free cash flow yield of 20-25% to market capitalization.
92 RUSSIA Country Report June 2019 www.intellinews.com