Russian Technologies selling 45.42% of VSMPO-Avisma to management, Gazprombank for $970 mln
MOSCOW. Nov 27 (Interfax) - The state Russian Technologies (Rostekhnologii) corporation is selling 45.42% of titanium producer VSMPO-Avisma to the company's management and to Gazprombank for $965 million-$970 million, VSMPO-Avisma's general director, Mikhail Voyevodin, told reporters.
Following the deal, Nordcom, a Cyprus-registered joint venture between management and the bank will own 50% plus one share in the corporation. Russian Technologies will own 25% plus one share.
Closure is expected within two weeks.
Voyevodin said Nordcom would take on a $495 million from Sberbank and all related obligations to buy shares in the corporation from Russian Technologies.
"The $495 million is an outstanding Sberbank loan to Russian Technologies. We're transferring it to ourselves," Voyevodin said.
Nordcom will also receive 4.6% of VSMPO-Avisma that management has bought on the market.
VSMPO management will own 75% plus one share in the joint venture.
The cost of the deal works out at $187 per share or $970 million for the whole stake.
Russian Technologies will use its proceeds from the deal to pay off a loan of $294 million to VTB .
VSMPO said in a statement that it was raising a syndicated loan of its own to fund working capital. Its credit portfolio is currently $800 million.
VSMPO-Avisma management includes Voyevodin; Mikhail Shelkov, deputy board chairman; Alexei Mindlin, deputy CEO, economics and finance; Dmitry Sannikov, head accountant; and Artem Kislichenko, legal affairs manager.
Shares in VSMPO-Avisma soared 4% on the MICEX-RTS exchange to 5,512.1 rubles by 1:00 p.m. Moscow time.
Their average price for the last three months has been $161, so Russian Technologies is selling at a 16% premium.
Russian Technologies bought 70.42% of VSMPO-Avisma in 2006 for $125 a share.
The state corporation is retaining a blocking stake because it must own at least 25% plus one share in strategic civilian enterprises that use dual-purpose technology. VSMPO-Avisma is one such enterprises, as titanium is also used in defense-related products.
But VSMPO-Avisma is not on the list of strategic enterprises. The Nordcom joint venture is currently drafting the paperwork for the Federal Antimonopoly Service.
"VSMPO-Avisma's current management has succeeded in raising titanium production significantly. The all-time record for this has been exceeded by 10% this year. We expect output by the corporation will rise 10%-15% per year until 2015," said Sergei Chemezov, the head of Russian Technologies. "The enterprise is now financially stable, has guaranteed orders and has excellent growth prospects. We think this is a good time to hand control to management, which is buying our asset at a considerable premium against the market," he said.
"After becoming the main shareholders we will continue to grow our share of the world titanium market both by increasing supplies to major world aircraft corporations and by expanding on developing markets like medicine, automotive and oil and gas production. The company currently controls around 30% of the world titanium market. We have also signed long-term contracts this year with Russian companies, and orders in Russia have exceeded 5 percentage points for the first time and now account for 35% of the order book," said Mikhail Voyevodin. "The acquisition of mining enterprises in Ukraine will give us a stable resource potential - we already meet 30%-40% of our own raw material needs. We plan major new investment in this area in future," he said.
Voyevodin told reporters that VSMPO-Avisma is forecasting that its net profit to Russian Accounting Standards will surge 140% year-on-year to 7.1 billion rubles in 2012. The company expects revenue to grow 30% to 39.5 billion rubles.
VSMPO-Avisma expects to increase titanium production to 31,300 tonnes in 2012 from 24,700 tonnes last year, and plans to boost production to 40,000 tonnes by 2015.
The company will export about 60-65% of its output in 2012.
VSMPO-Avisma plans to complete a feasibility study in March 2013 for the development of the Central deposit in Tambov Region, which will require an estimated $300 million-$600 million of investment.
It was reported earlier that the company planned to produce 32,700 tonnes of titanium in 2012.