Russia 090818 Basic Political Developments
VTB shares likely to be offered to market at 4.8 kopecks
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- Shares in Russia VTB rise after report on valuation
- Banks Stepping Up Debt Collection
- Russias diamond Alrosa sees demand up
VTB shares likely to be offered to market at 4.8 kopeckshttp://www.interfax.com/3/511575/news.aspx MOSCOW. Aug 18 (Interfax) - New shares issued by VTB (RTS: VTBR) are have now been valued ahead of their placement on the market, a source close to the banking group told Interfax. "It'll probably be 4.8 kopecks," the source said. "The placement price already exists. The supervisory board will give its final approval when it meets next week," the source said. VTB traded at 4.1 kopecks a share on the MICEX Stock Exchange on Monday.
Earlier reports said the VTB board would approve the share price once a rights offering expires on August 24. Shares in Russia VTB rise after report on valuationhttp://www.reuters.com/article/rbssBanks/idUSLI2120620090818 Tue Aug 18, 2009 2:44am EDT MOSCOW, August 18 (Reuters) - Shares in Russia's second largest lender VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) rose 3.9 percent on the early trading after A Reuters report the bank was independently valued at 20 percent premium to market ahead of a secondary placement. State-controlled VTB is struggling with losses as provisions for bad loans rise and the state has already allocated 180 billion roubles to inject into the bank's capital. (Reporting by Dmitry Sergeyev)
Banks are three times more active in going after overdue corporate loans today than in March, when President Dmitry Medvedev castigated lenders who resist rescheduling payments for “corporate selfishness.” The total amount of overdue debt sought in court by the country’s top five banks has increased by almost 250 percent, from 26 billion rubles ($792 million) in March to 91 billion rubles ($2.8 billion) today, Kommersant reported Monday, citing data from the Moscow Arbitration Court. The leading position is held by Alfa Bank, which is attempting to recover a total of 26.4 billion rubles. The company’s biggest debtors are meat processor Prodo Group and GAZ, who have 3.9 billion rubles and 3.8 billion rubles of debt outstanding, respectively, the newspaper reported. Just slightly behind is VTB, with 26.1 billion rubles — although the bank would be in first place if it were counted together with its retail banking arm, VTB-24, which is seeking to recover over a billion rubles of debt itself. Nomos Bank, MDM and Sberbank round out the top five. Bank of Moscow, seeking just over 100 million rubles, is at the bottom of the list. In March, an irritated Medvedev moved to defend struggling producers from banks seeking to recover their loans, saying lenders should not be able to halt the operations of a company even if they had legitimate complaints. “We can’t sacrifice the future of entire enterprises and the employment of many thousands of workers to satisfy the ambitions of individual lending institutions,” Medvedev said. “It’s time to end corporate selfishness.” The comment seemed to be aimed at Alfa Bank, the country’s largest private lender, who at the time was involved in a legal battle over loans with companies that are part of Basic Element. Banks, however, said they are acting lawfully and have no other means of getting their money back. “We are a 100 percent private bank, and we receive all our loans from the Central Bank and VEB on certain conditions and at a certain rate of interest,” an Alfa Bank spokesperson said in an e-mailed statement. “Therefore, the cash we loan to our clients is mostly borrowed and can be demanded back by our creditors at any time.” Alfa Bank’s shareholders recently gave it $320 million in capital, which makes the lender highly accountable to them, the lender said. “If some of our clients are in trouble, we are ready for an open dialogue,” the bank said. Other banks said they rush to recover loans in order to avoid being taken advantage of by debtors. Some debtors prefer to have their companies liquidated, which allows them to be in control of the bankruptcy process, said Irina Gordeyeva, vice president at Nomos Bank. “Banks are aware of such behavior and try to get a court ruling as soon as possible in order to control the bankruptcy process and prevent the debtor from divesting assets,” she said. Nevertheless, stringent loan repayment policies during difficult economic times might not be in lenders’ best interests. “The banks that apply tough policies have chosen an irrational approach,” said Metropol’s Mark Rubinstein. “During a recession, the real sector expects banks to be more concessive and cooperative.” Russia's diamond Alrosa sees demand uphttp://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLH54212820090817 Mon Aug 17, 2009 11:21am EDT * Alrosa saw market demand in August, first time in 2009 * Hopes to break even with help of state purchases * Agreed a $276 mln debt restructuring with Alfa bank By Polina Devitt and Dmitry Sergeev MOSCOW, Aug 17 (Reuters) - Russian state diamond miner Alrosa has started to feel demand on the market for the first time this year, but will depend on the state to manage its $3.6 billion debt, Alrosa's spokesman said on Monday. Alrosa, the main rival to global major De Beers, produces about one-quarter of the world's rough diamonds and sold $66 million worth of diamonds on the market of in August. These were the first sales of the year to anyone other than its buyer of last resort, the Finance-Ministry controlled State Precious Metals and Gems Repository (Gokhran). "We have managed to start paying down our debt because we have started selling our output to the market again," the spokesman said. "We sold rough and cut diamonds worth $66 million in August." Alrosa paid off 2.8 billion roubles ($88.27 million) owed to Russia's largest private lender, Alfa Bank, under a newly struck restructuring deal, the companies said on Monday. "Alrosa has redeemed an overdue loan for 2.8 billion roubles. Three other loans for 2.8 billion roubles, $48 million and $52 million respectively, the company will pay back in 2010," Alexey Zotov, director for major corporate business at Alfa Bank told Reuters on Monday. The rouble loan bears a rate of 15 percent while the dollar-denominated loans pay 13 and 13.25 percent respectively, plus the restructuring fee. LOSS MAKER Alrosa posted a net loss of 14.7 billion roubles for the first six months of 2009 under Russian accounting standards as sales plummeted in the global economic recession. It is expected to rely on more government purchases to keep cash coming in, a Gokhran source told Reuters on Monday. Diamond producers across the globe have been badly hit by weak demand as a global recession tightens its grip, but the world's top diamond producer De Beers has said demand should pick up in the second half. [ID:nLN374020] Gokhran bought diamonds worth 14 billion roubles for state reserves in the first half of the year, and Alrosa was seeking to sell Gokhran another $3 billion worth of gems during 2009-2010 to earn enough to serve the company's outstanding debt, which totalled $3.6 billion at the beginning of 2009. "The company hopes shareholders will help it to restructure the short-term debt and will increase the purchasings from the State Reserves to help the company to pay the debt from its own account," the source close to Alrosa said, adding that Gokhran had not decided on future purchases. Alrosa earned 1.57 billion roubles in 2008. If Gokhran maintains its purchases, it hopes to break even in 2009 despite recent heavy losses, Alrosa's spokesman said. Early in the crisis, Alrosa acted as a state agent in the bailout of Russia's first victim of the financial turbulence, investment bank KIT Finance. Alrosa has already decided to sell off non-core assets -- specifically its domestic gas and oil assets -- to state-controlled VTB bank (VTBR.MM: Quote, Profile, Research, Stock Buzz), one of its major creditors, for around $600 million. [ID:nLE391803] Alfa Bank, controlled by billionaire Mikhail Fridman, is widely known for a tough approach to the debt restructuring process and is involved in dozens of court cases to retrieve debts from troubled borrowers. Among them are companies controlled by indebted businessman Oleg Deripaska, who is near a deal with a 70-strong pool of creditors to restructure $7.4 billion in foreign debts owed by aluminium giant RUSAL, Russia's biggest debt settlement. Early in the process the creditors' club sought state intervention in a dispute between Alfa and RUSAL. ($1=31.72 ROUBLE) (Reporting by Polina Devitt and Dmitry Sergeyev; editing by Mariam Karouny)
Alrosa has named Igor Kulichik, the company's former chief treasurer and finance director, as vice president for financial policy. Under his new title, Kulichik will now be responsible for financial policy issues, Alrosa's projects in Africa and the activity of the mining company's subsidiaries and affiliates. In other company news, Alrosa reported that it sold $35 million in rough diamonds to the market during the first ten days of August. With regard to cut diamonds, Alrosa's newly appointed president, Fyodor Andreyev, has ordered Brillianty Alrosa, the division that handles cut diamonds sales, to draft proposals on pricing and selling the stockpiles, reports Interfax.
Tuesday, August 18, 2009 charge Following the acquisition of 50.1% in KazakhGold, Polyus Gold expectedly reelected the company's BoD. Four representatives from Polyus Gold were appointed to the seven seat board: Evgeny Ivanov (CEO), German Pikhoya (Deputy CEO), Oleg Ignatov (CFO) and Boris Zakharov (COO). Aidar Assaubayev will keep a seat on the BoD, in essence now representing the second largest shareholder with 20% of votes. David Netherway will keep his position as an independent, non executive director, and Stephen Oke will return as the second independent director. Ivanov has been appointed as Chairman of the BoD and CEO of KazakhGold. Polyus Gold also replaced all top managers at the Kazakh company, its appointees including the CFO, COO and head of the London office. Overall, we expect Polyus Gold's team to take full charge of operations, and the recent high profile appointments highlight the company's strong commitment to the asset. POWER CONCERNS IN SIBERIA Electricity prices on balancing market in Siberia up 400% after Sayano-Shushenskaya HPP accident http://www.businessneweurope.eu/dispatch_text9540 Citibank, Russia August 18, 2009 Electricity prices on the balancing market in the Siberian price zone increased 400%, reaching Rbl 1,000/MWh yesterday as a result of the accident at Sayano-Shushenskaya HPP, Interfax reports, citing the System Operator. The reason is that the System Operator quickly redistributed the load from the HPP to the more expensive thermal power plants in Siberia, namely TGK-11, TGK-12, OGK-3, OGK-6 to cover the lack of electricity as Sayano-Shushenskaya HPP's capacity should have covered 30% of Monday's electricity output in Siberia. The Energy Ministry is planning to increase the load to maximum levels for Krasnoyarskaya HPP (Not rated) and Bratskaya HPP, which is controlled by Irkutskenergo (IRGZ.RTS; US$0.28; 1H) and other thermal power plants. We think the news will be positive for electricity prices in Siberia, the beneficiaries of which are hydro power plants: Krasnoyarskaya HPP and Irkutskenergo's HPPs and then thermal power plants in Siberia, such as Berezovskaya GRES (OGK-4), Gusinoozerskaya and Kharanorskaya GRES (OGK-3), and Krasnoyarskaya GRES-2 (OGK-6). However, there is a risk of tariff regulation in Siberia by the government.
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