Program to convert shares in GDRs will bring Magnit
MOSCOW. Nov 12 (Interfax) - A program to convert OJSC Magnit shares into GDRs could bring the company's minority shareholders up to $90 million owing to the different on the value of the shares on the Russian stock market and the London Stock Exchange (LSE), analysts said.
On Thursday, Magnit announced that it was launching a program to convert its common shares into GDRs (one share to five GDRs). JP Morgan Chase Bank is carrying out the conversion. "According to Russian legislation, no more than 30% of a Russian company's shares can be traded on foreign markets. In the framework of this program, the total share of GDRs could be increased to 30%," Magnit's director for investor relations, Oleg Goncharov, told Interfax.
After holding an SPO at the end of October, Magnit's GDR program was increased from 14% to 22% of charter capital. As a result, an additional 8% of the retailer's shares could be transferred in GDRs.
Marat Ibragimov, an analyst at Cit Bank, said that around7.04 million shares could be converted into 35.23 million GDRs. At the SPO placement value ($65 per share and $13.5 per GDR), the total program could reach $457 million. Bearing in mind that Magnit's shares are traded in Russia with an almost 20% discount against their counterparts in London, the company's minority shareholders could earn up to $90 million on the difference in quotations, Ibragimov said.
Last month, Magnit's shares traded on the RTS at $60 per share. On Thursday, their quotations went up to 65. On the MICEX Stock Exchange, the retailer's shares were traded at 1,800 rubles (around $62.5). On the LSE, the company's GDR were for $15 per issue ($75 per share).