2 Apr 2010 15:23

Kuzbass Fuel Co to start marketing IPO next week

MOSCOW. April 2 (Interfax) - Troika Dialog and UBS will start publishing analytical reports for and launch pre-marketing for an IPO by Kuzbass Fuel Company next week, a banking source told Interfax.

A source at an investment fund told Interfax that the bankers had informed him that meetings would take place next week with a coal producer that intended to hit the stock exchanges.

A source at another fund said Kuzbass Fuel Company was planning to float shares at the end of April.

Vostok Nafta, a minority shareholder in Kuzbass Fuel Company, says in materials that the company is planning an IPO in order to raise the funding needed to double coal production and keep up with growing demand.

It said the company would invest $280 million in a bid to raise coal production to 11 million tonnes by 2013, was building an enrichment plant, capacity 2 million tonnes per year, to enhance coal quality, and planned to build two more plants in time. It also plans to increase coal reserves to approximately 800 million tonnes.

Kuzbass Fuel Company plans to bolster its share capital 17.65% by issuing 2.98 million rubles in new shares. Its shareholders voted on February 17 to place 14.9 million ordinary shares, par value 0.2 rubles each.

Share capital is currently 16,879,880 rubles, and will rise to 19,859,880 rubles as the result of the share issue.

The additional shares will be offered in a public subscription with a rights offering to shareholders on record as of January 15, 2010.

The company says in a financial report for the fourth quarter of 2009 that Igor Prokudin, its general director, owns 60.9% of the company. LLH Lake Land Holding AG, which is controlled by Prokudin's deputy and the coal producer's board chairman, Vadim Danilov, owns 28%, and CJSC Depositary Clearing Company owns 9.7%.

A number of investment funds became shareholders as the result of a private placement in 2008.

OJSC Kuzbass Fuel Company was set up by the Kemerovo regional administration as a state unitary enterprise in 2000, and was corporatized at the end of 2001. It supplies coal for households and utility providers. It is licensed to develop the Karakansky-Yuzhny, Vinogradovsky and Cheremahansky coal fields by the open-cast method.

Russian coal produces are at the center of the investment community's attention right now. Coal prices are on the up and the companies themselves have made efforts to improve their governance and transparency. No. 2 Russian coal producer Kuzbassrazrezugol Coal Company, or KZRU , which is quoted on the RTS Board, the quote-driven market for unlisted stocks and bonds, has seen its market capitalization increase significantly, largely because it has abandoned transfer pricing.

Kuzbass Fuel Company might be joined in the IPO market by Siberian Coal and Energy Company (SUEK), which is thought to be targeting $1 billion-$1.5 billion with an IPO in London.

Aman Tuleyev, governor of the Kemerovo region, where Kuzbass Fuel Company is based, said in February that the company aimed to raise coal output 10.6% or 650,000 tonnes in 2010 compared with 2009 to 6.8 million tonnes.

He said the company was targeting capex of 1.1 billion rubles, including 800 million rubles for the enrichment plant, which would be commissioned in August.