Page 124 - RusRPTJun20

with his brother and ex-senator of North Caucasus Republic of Dagestan Magomed Magomedov, accused of large-scale embezzlement and running an economic crime ring. Magomedov's ​Summa group​ was a large investor in transportation assets that include the NCSP, Fesco ports and Transcontainer, as well as construction, oil and gas, agriculture and telecom assets. Most of the transportation assets ​have been sold since 2018​, but he still controls 32.5% of Fesco, along with TPG's 17.4%. Summa Group acquired the stake in Fesco for an estimated $1.4bn, but the loans raised for the deal from Sberbank, VTB and a foreign syndicate expire in 2020. Despite the $800mn bond issuance in 2013 refinancing about $400mn of the debt, Magomedov and TPG still reportedly owe $0.9bn to Fesco, as the stake in the company was acquired through a leveraged buyuot (LBO). "Fesco was bought on LBO, nothing illegal about that. High Ebitda and high dividends were anticipated to cover the debt of the shareholders. Unfortunately, a succession of crises made this impossible," unnamed sources told RBC. State-controlled VTB Bank is currently the only creditor of Fesco, with about $0.6bn of debt as of the end of 2019, and the shares of Magomedov, TPG and Marc Garber (23.8%) are collateralised with the bank. It is possible that the debt claims against the shareholders will result in re-sales of their stakes through VTB.
The shareholders of Russian transportation major ​Globaltrans​ approved the plans to buyback of 5% of shareholder capital within the next 12 months ​on the open market at market price, ​previously proposed by the board of the company​. As reported by ​bne IntelliNews​, gondola car operator Globaltrans reported an IFRS revenue increase of 12% year on year to RUB34.4bn ($442mn) in 2H19, and by 13% y/y to RUB69bn for 2020 overall, on both higher average rolling stock in operation (6%) and average price per loaded trip (9%). However, the company posted missed cash flow expectations on higher maintenance capital spending and higher costs of fleet additions, but maintained a dividend yield of as much as 22%. Globaltrans remains one of the ​top picks in Russian equity universe​, but the name was recently removed from the ​BCS Global Markets basket of top dividend payers​. Sberbank CIB sees more downside risks to the dividends from the buyback decision. While the analysts agree that buying back shares is better than purchasing rolling stock in the current market, they see "the risk that in the end, the buyback could simply replace dividends, producing a similar total return for shareholders, just in a different way." Sberbank CIB argued on May 13 that the market situation does not bode well for Globaltrans' earnings and therefore keeps a neutral view on the stock.
9.2.13 ​Other sector corporate news
Russia’s largest petrochemical company ​Sibur​ will supply two cargoes of liquefied petroleum gas (LPG) to India in May for the first time ever ​as it looks for new markets after demand in Europe fell sharply due to the coronavirus outbreak, ​Reuters ​reported citing traders and shipping data. Most European countries have been in lockdown since March amid the coronavirus pandemic, causing a drastic fall in fuel consumption. As LPG is widely used in Europe as motor fuel, it was hard hit by a lack of demand. In India, though, LPG demand is seen rising this year despite the coronavirus as it is mostly used by private households as cooking gas and therefore in demand during the lockdown. In March, LPG sales in India rose about 1.9% from February to 2.31 million tonnes, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.
124​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com