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Rostelecom filed an application to the Federal Service for Financial Markets (FSFM) for putting in circulation outside of Russia 24.99% of its preference shares. The operator has no plans to place the shares under the state control, in the hope that the right to convert shares into GDR will be used by minority stakeholders which account for 71.2% of the preference shares of Rostelecom.
Rostelecom has applied to the FSFM to obtain a permission to list on the LSE 60,707 million preference shares. This is 24.99% of all Rostelecom’s such shares and the maximum amount allowed for trading on foreign exchanges. Yesterday on the MICEX this package was worth 4.3 billion rubles. Application for listing of 735.8 million ordinary shares (approximately 24.99%) was approved by the FSFM in May. Application for listing on the LSE ordinary and preference shares will be sent to London "from day to day," "Kommersant" was told in the press service of Rostelecom.
Proceeds of Rostelecom in the first quarter under IFRS amounted to 72.4 billion rubles, OIBDA - 27,2 billion rubles. 53.25% of company is owned by the government through "Svyazinvest", VEB and the Deposit Insurance Agency. The capitalization on the MICEX yesterday was 441 billion rubles.
The plans of Rostelecom to get listed overseas became known in early 2010. April 2011 was planned for placing more than 25% of company’s shares, said the former CEO of "Svyazinvest" Evgeny Yurchenko. It was planned that the shares will be quoted on the LSE, and possibly on the NYSE and the Hong Kong Stock Exchange, but the timing of listing was postponed. According to a source of Rostelecom, this was due to the need to display on the LSE a single release of Rostelecom, having the actual financial statements of the company. 17 issues of shares of Rostelecom were combined into a single on August 10, the publication of the first of Rostelecom’s post-reorganization financial statements under IFRS are expected in October.
The company and the state do not plan to participate in the listing of preference shares, according to Rostelecom. "It makes no sense to force listing given the situation on the markets. First you need to complete the restructuring of Rostelecom , complete the unification of" Svyazinvest "to eliminate cross-ownership", says "Uralsib Capital’s” head of analytical research Konstantin Chernyshev.
2.69% of ordinary shares and 28.8% preference shares of Rostelecom are on the balance of its subsidiary company "Mobitel". Minority stakeholders own 44.1% of ordinary shares and 71.2% of preference shares. "Any shareholder who owns preference shares will be able to convert it into GDRs and hold more liquid securities," said the representative of Rostelecom Oleg Rumyantsev. Access to Rostelecom’s GDR will also receive a number of foreign investors who now cannot invest in local shares. Minority shareholder of Rostelecom Evgeny Yurchenko, whose portfolio (0.015%) contains preference shares has no plans to convert them into GDR arguing that "there is no difference if they are in London or in Russia."
When applying for the preference shares LSE listing, Rostelecom leaves room for manoeuvre, if ordinary shares will be popular among foreign investors, says analyst "TCB Capital" Cyril Bakhtin. Listing on the LSE will help reduce the spread between equities and preference shares of Rostelecom adds Konstantin Chernyshev (now it’s about 50%). Foreign investors who acquire GDR on the basis of 2011 can get a return on preference shares at a level of 6-7% per share (4.5 rubles or in total - 273.1 million rubles.), evaluate "Uralsib Capital" . Rostelecom has not yet finished work on the dividend policy, but for these purposes it cannot spend less than 40% of the net profits of the company, said earlier a source of our newspaper. In 2010 Rostelecom sent to dividends about 30% of net income, or 1.15 billion rubles.
The representative of the depositary bank for Rostelecom’s GDR program JP Morgan Chase declined to comment on questions about the listing.