11 Nov 2010 14:23

Rosimuschestvo, Merrill Lynch do agent agreement for sale of up to 10% of VTB stock

MOSCOW. Nov 11 (Interfax) - Russia's federal state property agency Rosimuschestvo and LLC Merrill Lynch Securities, a Merrill Lynch subsidiary in Russia, have signed an agent agreement concerning organization for the sale of up to 10% of the stock in Vneshtorgbank (VTB), Rosimuschestvo told Interfax.

"Rosimuschestvo and LLC Merrill Lynch Securities have concluded an agent agreement stipulating that the agent is to act on behalf of the Russian Federation to take measures for the sale of federally owned ordinary shares in VTB in an amount of not more than 10% of charter capital," the property agency said.

Merrill Lynch is to effect an appraisal of VTB stock's market value as soon as possible - bringing in an independent appraiser and getting expert SRO (self-regulatory organization) conclusions - and submitting recommendations to Rosimuschestvo as to possible buyers, share price, and other terms of sale.

An appraisal of VTB, as proposed in the agreement, should receive the approval of a third (independent) party in regards to the fairness of the price and the terms proposed, as well as their compliance with the usual fairness opinion.

The size of Merrill Lynch's compensation will be set by a government decision.

"In light of the positive development of the Russian economy, the implementation of the privatization of shares in OJSC VTB Bank will facilitate the creation of conditions for attracting additional investment, development of the stock market and modernization of the Russian economy," Rosimuschestvo said.

OOO Merrill Lynch Securities' operations as an agent for the Russian Federation are supported by a guarantee from Merrill Lynch & Co., the federal agency said.

It was earlier reported that the government approved Merrill Lynch as the organizer of the sale of 10% in VTB according to a government order dated November 2.

According to the government order, the bank's shares should be sold a price that is not below the market level set according to an estimate from an independent assessor with which Merrill Lynch will sign an agreement as agent.

The organizer should present Rosimuschestvo and the Economic Development Ministry a financial report on the potential buyers of the VTB shares based on their price offers and the number of shares they plan to acquire. Merrill Lynch, on the behalf of the Russian Federation, will sign a buy-sell agreement with the buyers included in a separate pronouncement from the Cabinet of Ministers.

The Economic Development Ministry has been instructed to reach an agreement with the Finance Ministry to present the government a draft decision for the share sale.

Negotiations are also underway between Rosimuschestvo and U.S. investment fund TPG regarding the text of a buy-sell agreement for shares in VTB, a government source told the Russian daily Kommersant.

Russia owns 85.5% of the shares in VTB. Government officials have said several times that up to 10% of VTB's shares would be sold this year. TPG could head up a pool of investors, each of which would acquire 1%-1.5% in VTB, the bank's president, Andrei Kostin, earlier said.