Bid book for Mechel prefs subscribed at 15% discount - source
MOSCOW. April 15 (Interfax) - The bid book for preferred shares being sold in the Mechel coal and steel group has been subscribed at a 15%-discount, a financial market source told Interfax.
A source at one investment fund said a discount of 10%-15% had been mentioned. A source at another said the book had closed but he said nothing about a discount.
The ADR price for Mechel prefs, where two American Depositary Receipts (ADR) represent one share, was $10.24 at closing on the Mew York Stock Exchange on April 14. In other words, the book is subscribed at $17.4 per preferred share.
The Justice family is selling up to 26 million Mechel prefs on Russia's RTS and MICEX exchanges. The family owns 42% of the prefs in Mechel Group (58.3 million prefs).
Mechel filed an application with the RTS and MICEX exchanges for including its prefs on a list of securities allowed for trading (without listing).
Pricing is due on April 20.
Morgan Stanley, Renaissance Capital and VTB Capital have been appointed the organizers of the placement.
The placement is taking place on Russian stock exchanges since the quota for Mechel's ADRs (American Depositary Receipts) has been exhausted: the Justice family has already placed 25 million prefs in Mechel in the form of ADRs on the NYSE.
The Justice family acquired 83.3 million prefs in Mechel from the sale of U.S. asset Bluestone Coal Co. to the Russian company. A total of 55.5 million shares were retained by Mechel's subsidiary Skyblock Ltd, which became treasury shares. According to the transaction's agreement, both sides should hold a public placement of prefs as soon as favorable market conditions appear.
The Mechel Group has consolidated controlling stakes in coal, steel and iron ore companies and a number of ports. General Director Igor Zyuzin is Mechel's chief beneficiary. The ADR free float is around 30%.