24 Sep 2021 12:54

Rashnikov selling 1.5% of MMK via ABB, price guidance is $1.028-$1.0679 per share

MOSCOW. Sept 24 (Interfax) - Mintha Holding Limited, representing the interests of Viktor Rashnikov, the principal owner of Magnitogorsk Iron & Steel Works (MMK) , is selling 1.5% of the company's shares in the form of an accelerated order book.

The organizer is Goldman Sachs. A total of 167,614,050 shares of MMK are being placed. Mintha's stake in the company following the transaction will be reduced to 79.76%, and free float will grow from 18.74% to 20.24%, the company said.

Rashnikov's remaining stake will have a two-month lock-up period. The restriction was just as short after ABB's April deal, when Mintha sold a 3% stake in MMK.

Price guidance for the placement is $1.028-$1.0679 per share, a market source told Interfax. The closing price on the LSE on Thursday was $14.06 per GDR, which was equivalent to $1.0815 per share. MMK's placements are characterized by a moderate discount to the market, and they were lower than 4% in the last two such deals.

Having sold the shares for sale in the stated range, Rashnikov's structure, excluding commissions, should gain about $170-$180 million.

In November last year, following a revision, MMK's shares were excluded from the MSCI Russia index. The MMK IR team called it a highly undesirable event at the time.

"At the moment, our team is working on developing a plan to return to the index. We hope that the recovery of the Russian economy in 2021 and, accordingly, the recovery in steel demand, will contribute to this," the company said in a blog for investors.

In the spring this year, Rashnikov told Interfax that he was considering another SPO, following the April deal, in order to return the company's shares to the MSCI Russia.

"We have the task of returning to the MSCI. What we have placed is 3%, this is normal, and we believe that we have a normal period, when we chose to enter the market. We have placed a normal volume, it is just that around another 1.5% [of placed shares] is needed for the MSCI," the owner of MMK noted.

The next semi-annual revision of the structure of the MSCI indices is to take place in November.

Ilya Pitersky, senior stock market strategist at VTB Capital, noted in an analytical review published at the beginning of September that prices for MMK's shares were near the threshold value.

"The market value of these securities must rise by another 4% in order to break through the target level and enter the index," Pitersky said in the review. If MMK returns to the MSCI Russia Index, passive capital inflow into its shares would total around $220 million, Pitersky believes.