Globaltrans Group conducting $500-mln SPO in London
MOSCOW. July 9. (Interfax) - Globaltrans Group is conducting a secondary public offering (SPO) worth up to $500 million, the company said in a statement.
"The Offering will comprise a primary component of approximately $400 million in the form of GDRs issued against shares sold by the Company [Globaltrans Group's parent company], and a secondary component of approximately $50 million in the form of GDRs issued against existing shares sold by Transportation Investments Holding Limited (TIHL), the controlling shareholder of Globaltrans," it said.
"TIHL is expected to grant the underwriters an over-allotment option to purchase up to an additional $50 million in the form of GDRs at the offer price," the statement said.
One GDR is the equivalent of one ordinary share. The company expects to place the receipts at a price between $16 and $17.5 each on the London Stock Exchange (LSE).
Deutsche Bank, JPMorgan, Morgan Stanley and Troika Dialog are the organizers of the placement.
"Following the Offering, the Company's free float is expected to be approximately 48% of its issued share capital (assuming full exercise of the over-allotment option)," the statement said.
"Certain members of management have expressed an intention to purchase GDRs in the Offering," it said.
The road show will begin on Monday.
Expand the business, buy locomotives
"Globaltrans' strategy is to continue expanding its business as the Russian freight rail market liberalizes and consolidates further," the statement said.
"Following the transaction there shall be a lock-up period of 180 days for the Company and its principal shareholders TIHL and the shareholding entities owned by the Group's management ('Principal Shareholders'), subject to certain customary exceptions," it said.
According to the statement, Globaltrans aims to spend the funds raised during its SPO on expanding its fleet. "The Group believes that it is well-positioned to further capitalize on growth opportunities in the Russian freight rail market, as evidenced by the recently completed acquisition of LLC Metalloinvesttrans (MIT) and significant railcar purchases," the statement said. The company is looking to acquire both cars and locomotives.
Globaltrans is actively consolidating assets in the industry. On May 15, it finished buying 100% of MIT, the former captive freight rail transportation operator of Metalloinvest, with 8,256 railcars in ownership, for $540 million, financed through the Group's existing funds and borrowings under a new credit facility.
"In order to capitalize on continued robust customer demand combined with attractive prices for rolling stock, the Group increased its purchases of railcars in the final months of 2011. Since that time, the Group has contracted to purchase 10,958 railcars, of which more than 90% have been delivered and deployed as at July 5, 2012," the statement said.
As a result, the number of cars under Globaltrans ownership will reach roughly 64,000 by the end of August.
"In a railcar market that is ripe for consolidation there are clear signs that major companies are looking to outsource their freight rail transportation to an operator of Globaltrans' quality that can serve all their needs. Our expanded and modern fleet and excellent operating capabilities allied with long-term client relationships mean we are very well-positioned to capitalize on this important trend," CEO of Globaltrans Sergey Maltsev is quoted as saying in the statement.
Last fall, Maltsev said that Globaltrans is looking to buy up to 100 locomotives for operations at local points. "We have about 40 routes, each of which requires an average of seven to eight locomotives," he said, noting that each new locomotive costs about $2.5-$3 million, although their supply in Russia is limited (but there is the opportunity to buy equipment on the secondary market - for example, in Kazakhstan).
Globaltrans plans to buy locomotives partially with a 2.5-billion-ruble, seven-year credit from the European Bank for Reconstruction and Development (EBRD). According to the Russian government's plans until 2015, operators might get the right to carry out independent transport of their cars with locomotives on several routes in 2013.
30% on dividends
In addition, Globaltrans' board of directors approved the group's dividend policy. "The dividend policy is to recommend to shareholders, for their approval at the Group's Annual General Meeting, a dividend per annum of not less than 30% of the imputed consolidated net profit of the Group, if any," the statement said. "When adopting the dividend policy, the Board of Directors expects that it will remain in force for an indefinite period of time. However, the provisions of this dividend policy are subject to modification from time to time as the Board of Directors may deem appropriate," it said.
Globaltrans specializes in transporting metals, oil, cement and coal. Transportation Investments Holding (equally controlled by N-Trans top managers Konstantin Nikolaev, Nikita Mishin and Andrei Filatov) owns 50.1% of its shares, and Envesta Investments (51% of which belongs to General Director Sergei Maltsev and 49% of which belongs to Chairman of the Board of Directors Alexander Yeliseyev) owns 12.2%. Free float is 35.31% of charter capital, and 2.3% of shares are treasury.
According to its financial statement for Q1 published on Monday, adjusted revenue grew 5.3% to $304.9 million, and adjusted earnings before taxes, depreciation and amortization (EBITDA) rose 25% to $153.3 million. The adjusted EBITDA margin rose to 50.3%, compared to 42.3% in the same period of 2011, "mainly due to the substitution of Leased-in Fleet with newly-acquired railcars and an increase in Net Revenue from Operation of Rolling Stock per railcar," the statement said. Net profit jumped 33%.
