Transneft board of directors in Sept could consider matter of splitting shares 100-fold, committee approves split
MOSCOW. Sept 1 (Interfax) - The board of directors of PJSC Transneft in September could consider the matter of splitting the company's shares, Gennady Shmal, a member of the Russian oil pipeline operator's board of directors, told Interfax.
Transneft's charter capital is divided into 5,694,468 ordinary shares and 1,554,875 preferred shares at par value of one ruble. The government owns all of the ordinary shares, and prefs are traded on the market. Transneft's shares are the most expensive, in absolute terms, on the Russian stock market among liquid securities, currently valued at 130,000 rubles per share.
"Literally on the 29th [of August], at a meeting of the committee [of the board of directors], we discussed the topic [of the split], and decided to support the proposal of the administration and management of the company to split the shares," Shmal told Interfax.
"The shares are very expensive. Who could buy the shares? One, two, or three is possible. Therefore, in the proposal formulated at the committee meeting, we decided to propose to the Transneft board of directors to decide on a split, to reduce the cost by a hundred times. Conditionally, if [a share costs] 120,000 rubles currently, then it would be 1,200 rubles. This would render it possible to attract ordinary citizens more widely [to buy Transneft shares]. Therefore, the topic is relevant," Shmal specified.
"There will still be the board of directors, and then the consent of the main shareholder [the government] is required," Shmal added.
Shmal recalled that the matter was first broached three years ago, when the committee already supported the split. "However, there were many questions and complications, and then the matter was not implemented. Sentiment is currently such that it could be completed rather quickly," he said.
The date for the upcoming meeting of the board of directors has been tentatively set so far. "The [meeting of the] board of directors is scheduled for September 15 as of today, though not set in stone. This will depend on the situation and how busy our chairman of the board of directors [Deputy Prime Minister Alexander Novak] will be," Shmal said.
Kirill Dmitriev, head of the Russian Direct Investment Fund, who was then a member of the board of directors of Transneft, was the first to propose the idea of splitting prefs at a ratio of 100 to 1 in 2017. Dmitriev noted that this would increase the company's shareholder value and the attractiveness for investors to invest in the company by lowering the entry threshold. The company's board of directors in 2021 confirmed plans for a share split, though there were plans to hold consultations with international institutional investors and to work out issues related to the legal regulation regarding the split of Transneft's shares as per EU law.