Finance Markets

May 20, 2005

Evraz to list on LSE

Filed under: Companies, Russia
Russia to repurchase bilateral debt

Russian steel company Evraz will soon become the latest Russian company to offer shares on the London Stock Exchange.

The company is expected to raise between $393 million and $495 million with its initial public offering, which is expected to start trading shortly after June 1. The listing comes at a time when steel prices seem to have reached a peak and are on the way down.

Evraz plans to use the capital raised from the sale to make improvements to plants and mills, and to pursue acquisitions at home and abroad. The company recently purchased a manganese mine in the Caucasus , in Georgia, and has indicated interest in bidding on a steel plant in the Czech Republic.

Evraz will sell 29.1 million global depository receipts (GDRs) in a holding company based in Luxembourg. Each GDR will be priced between $13.5 and $17, and three GDRs will equal one share in the company.

This puts the market value of the company at somewhere between $4.7 billion and $6 billion. The founder and chief executive of Evraz, Alexander Abramov, is believed to own around 65 percent of shares in the company.

Evraz is following a recent trend for Russian companies to list in London. Conglomerate Sistema completed a listing in February, while Russia’s largest grocery retailer, Pyaterochka, listed earlier in May.

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May 13, 2005

Russia to repurchase bilateral debt

Filed under: Economy, Russia
Russia to repurchase bilateral debt

Russia is near to reaching an agreement with the Paris Club on the nation’s plan to repurchase some of its bilateral debt.

Russia is looking to reduce its foreign debt since growing oil revenues have increased its reserves.

Creditors had been insisting that Russia pay a premium on its repurchase of debt because the debt was extended at below-market rates when the country’s finances were in worse shape than they are now, but one of Russia’s largest creditors agreed in principle last month to an at-par buyback (100 percent of the debt’s face value).

At the same time, comments from the Kremlin have recently suggested that the Russian government would agree to an at-par buyback.

Russia is anxious to repay these debts before its European creditors, needing cash themselves, sell the debt on the capital markets.

Germany, one of Russia’s largest creditors at around $18 billion of the $43 billion that Russia owes, repackaged around €5 billion of Russia’s debt into securities to be sold in the capital markets last year. This move undermined Russia’s bond prices.

The Russian finance minister said on Thursday that a deal with the Paris Club could reduce the proportion of his country’s foreign debt to 50 percent, from around 80 percent at the beginning of the year.

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May 12, 2005

Ukraine credit rating upgraded

Filed under: Economy, Asia, Russia
Ukraine credit rating upgraded

Standard & Poor’s upgraded Ukraine’s credit rating on Wednesday.

The country’s foreign currency rating went up one notch, from B+ to BB-, while its local currency rating was elevated from B+ to BB.

The action by S&P’s brought their foreign currency rating to the same level assessed by Fitch and a notch higher than Moody’s rating.

All the rating agencies now attribute a stable outlook to the country.

S&P’s took its action even though the government of Ukraine, led by Viktor Yushchenko, must still deal with rising inflation and issues of government spending.

Still, an analyst with S&P’s was quoted as saying that the change in Ukraine’s credit rating was prompted by a new administration that supports democratic values and the rule of law and which stands to lead political, institutional, and structural reforms that will create an open political system and a market economy.

Ukraine’s economy has been growing for the past several years, although growth has slowed down since the new administration took office over uncertainty as to who owns vital industries.

This uncertainty has affected business investment.

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May 6, 2005

Heineken buys Patra

Filed under: Companies, Russia
Heineken buys Patra

Dutch brewer Heineken has announced that it has agreed to purchase Patra a small brewer based in Yekaterinburg, Russia’s third largest city.

The purchase will increase Heineken’s share of the Russian market from 7.5 percent to 8.3 percent, and continues the company’s practice of buying small regional breweries in growing markets.

Petra’s net profits in 2004 were $1.2 million, on turnover of $27 million.

Heineken’s purchase comes after three years in which it underperformed the beverages sector in Europe by around 30 percent. Heineken will use available cash to fund the purchase, which is for an undisclosed amount.

Russia is the fifth-largest beer market in the world. Beer consumption in Russia increased at the end of the Soviet era when then-leader Mikhail Gorbachev promoted beer as a healthier alternative to the traditional Russian drink, vodka.

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May 5, 2005

Pyaterohka closes stores despite IPO push

Filed under: Companies, Europe, Russia
Pyaterohka closes stores despite IPO push

The pricing of the initial public offering of Russia’s largest grocery retailer on the London Stock Exchange hit a snag when the company had to close almost 10 percent of its stores due to a hepatitis A outbreak among its employees.

22 of Pyaterohka stores in St. Petersburg remained closed after 55 cases of the disease had been identified among staff. The source of the infection was believed to be contaminated hot meals to staff canteens by a caterer.

The outbreak forced an initial shutdown of 109 stores, but 87 of them had reopened by Thursday.

Those close to the IPO said that the outbreak had not affected the sale of shares in London and the company insisted that it would have no impact on financial results for the year.

The chain, which operates stores in Moscow and St. Petersburg, issued the IPO in hopes of raising at least $598 million by selling 30 percent of its equity.

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April 27, 2005

Russia considers rouble appreciation to stave inflation

Filed under: Forex, Economy, Russia
Russia considers rouble appreciation to stave inflation

Russia indicated Wednesday that it might let the rouble appreciate more than had been planned in order to ease inflation, as oil revenues feed Russia’s high inflation rate.

The first deputy chairman of the Russian Central Bank (CBR) said the effective exchange rate of the rouble might be allowed to appreciate as much as 9 percent this year, one more percentage point than had been planned.

Consumer prices in Russia went up 5.3 percent in the first quarter of 2005 and some forecasts have inflation for the full year possibly topping 13 percent. The CBR had previously announced that its goal was to reduce inflation to 8.5 percent in 2005, down from 11.4 percent last year, but this goal is now considered optimistic.

Even with the extra appreciation, the rouble could end the year nominally weaker if inflation does top the 13 percent mark. The CBR intervenes in the currency market daily to limit the volatility of the rouble.

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