Transneft board discusses preferred shares buyback, other measures to raise market cap - RDIF chief
MOSCOW. Oct 9 (Interfax) - The Transneft board of directors discussed the possibility of buying back preferred shares and other measures to raise the company's capitalization at a meeting on Monday, board member Kirill Dmitriev, who is the head of the Russian Direct Investment Fund (RDIF), told reporters.
"The Transneft board of directors met yesterday. The board of directors approved an instruction to management to provide a plan to increase the company's capitalization. As part of this we also discussed an options program for management and discussed, possibly, a buyback program, which may be considered, and other measures to raise market capitalization and raising the predictability of the company's dividend stream," Dmitriev, who heads the strategy, investment and innovation committee of Transneft's board of directors, said on the sidelines of the RDIF, Federation Council and ASI forum "Investing in the Regions, Investing in the Future"
"Accordingly, management will draw up the board's recommendation within three months and they will be considered by the Energy Ministry as the relevant ministry and by the board of directors," Dmitriev said.
The Russian state holds 100% of Transneft's voting shares, with only prefs on the market, meaning that the potential buyback refers to this class of share. Transneft preferred shares were up 1.8% to 168,500 rubles per share in trading on the Moscow Exchange on this news; based on this price the capitalization of the company's prefs is 262 billion rubles.
Transneft has 5,546,847 issued ordinary and 1,554,875 issued preferred shares, par value 1 ruble each.
In May last year Gazprombank disclosed who owns preferred shares bought from the UCP fund by a consortium of investors.
Gazprombank said 53.57% of Transneft's prefs were in the trusteeship of Gazprombank Financial, a closed-end mutual fund in which Transneft-Invest holds a 57.4% stake; that Gazprombank and the Gazprombank group members held 37%.
Another 14.85% of Transneft prefs are held by Gazfond, 1.49% by the Russia-China Investment Fund (RCIF), set up by the Russian Direct Investment Fund (RDIF) and China Investment Corporation, and 0.43% by the RDIF.
Upon becoming one of Transneft's shareholders, RDIF put forward a number of initiatives to increase its capitalization including pegging the oil pipeline operator's management stimulus program to the performance of its prefs.