Page 114 - RusRPTOct20

terms: issued at 100% principal, due 1 October 2025, 1.625% annual interest, 42.5% conversion premium, conversion possible from 1 October 2021. Shareholders buying convertible bonds and wishing to hedge their positions also placed existing Mail.ru shares via the above-mentioned ABB (1% share capital) Declared use of proceeds: funding of organic growth, flexibility in M&A (to pursue strategic opportunities in growth areas, with particular focus on those stimulated by the pandemic), funding of earlier announced investments in JVs (c$140mn) Fortunate timing to raise capital – share price at highs; upcoming MSCI inclusion provides extra support. As such and given the limited size of the capital raise, we find the event neutral (S-T pressure possible)
CBR registers prospectus for placement of up to 1.7bn of new​ ​Aeroflot shares in September​. The share placement process starts with pre-emptive rights (21 September until 1 October), followed by an open subscription in the form of book building (dates are TBC). The size of the book is to be announced at a later stage, once preemptive rights period is over and applications are submitted. The total size of the share issue, including both open subscription and pre-emptive rights, may amount to as much as 1.7bn shares i.e. RUB136.5bn at current market price). The final parameters of the deal will likely be known in early October.
Otkritie FC Bank conducted an overnight accelerated book-build, offering around 16mn shares in Polymetal, or 3.4% of the company's outstanding shares​, according to Bloomberg on September 8. The deal happened right after the expiration of the 60-day lockup period for Otkritie's previous deal in July. This leaves Otkritie with a stake of 0.5%, which, according to Bloomberg, is part of a structured transaction executed in July. Therefore, Otkritie has effectively sold its entire stake. According to Bloomberg, the deal price was R1,900 per share ($24.91), a 2.7% discount to yesterday's closing price of R1,953.1 for the main Moscow Exchange session. This puts the total deal size at around $400mn, which is relatively large compared with the previous ABBs for Polymetal stakes this year ($140mn, $244mn and $290mn). As Otkritie effectively sold its entire stake in one large transaction, the overhang risk in the stock has materially decreased. Since Alexander Mamut and Nikolai Mamut also both recently reduced their stakes to below the reporting threshold of 3%, the only remaining disclosed sizable financial investor is PPF with a 3.8% stake. MSCI in the May semiannual rebalancing raised Polymetal's free-float coefficient to 0.50. Recent stake transactions, including yesterday's, suggest another revision forthcoming, with our conservative early estimate being an increase to 0.65. This would imply minimum mandatory passive inflow of some $50-60mn, equivalent to 1.2 times the local line's 30d ADT. MSCI at this stage is most likely to adjust the free float in the May 2021 rebalancing, and any shareholder structure changes between now and the end of March would also be considered. Although not our base-case scenario, we will also be looking into whether there is any room for adjustments in the upcoming November
114 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com