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Home , Inter RAO, Transneft, T Plus

SSEECCUURRIIITTIIIEESS MMAARRKKEETT NNEEWWSSLLEETTTTEERR weekly

Presented by: VTB Bank, Custody

June 13, 2019 Issue No. 2019/21

Company News

T Plus, Energoholding continue talks over merger On June 6, 2019 Andrei Vagner and Denis Fyodorov, CEOs of Russian power utilities and Gazprom Energoholding, stated that the companies continue talks over a possible merger of their assets. T Plus and Gazprom Energoholding discussed their possible merger in 2011, but the deal was blocked by the Federal Antimonopoly Service then.

Transneft CEO says government mulling company’s buyback program On June 7, 2019 Nikolai Tokarev, CEO of oil pipeline monopoly , said that the Russian government was discussing a share buyback program of Transneft, and the company hoped that it would approve the plan this year. Transneft said in a presentation in October 2018 that it plans to spend up to RUB 20 bln, or 8% of its current market capitalization, on a 3-year buyback program for preferred shares, which will be used for a stock option program for its management. Transneft may spend RUB 6-7 bln per year on the buyback program in equal tranches. Transneft aims to pay 50% of its net profit in dividends. He also said that the board of directors of Transneft plans to study the strategy of Novorossiysk Commercial Sea Port at its next meeting that may be held in July-August.

Polymetal issues new shares for incentive program On June 7, 2019 it was reported that Russian precious metals producer again issued new shares for an employee incentive program. In accordance with the terms of the company’s performance share plan (PSP), 5,665 ordinary shares with no par value were issued to certain individuals, none of which are either directors or persons discharging managerial responsibilities (PDMRs). The shares are expected to be admitted to trading on the London Stock Exchange on June 11.

Sollers dismisses CEO Shvetsov, appoints Nikolai Sobolev On June 10, 2019 the board of directors of Russian car producer Sollers signed the dismissal of CEO Vadim Shvetsov and appointed his First Deputy Nikolai Sobolev as the CEO. Shvetsov, one of the key owners of the company, was appointed as the chairman of the board of directors, replacing Ruben Vardanyan.

Interros, mull no changes to dividend policy of On June 10, 2019 it was announced that Interros holding Russian tycoon Vladimir Potanin and aluminum giant UC RUSAL of tycoon Oleg Deripaska were not discussing any adjustments to the dividend policy of metals giant Norilsk Nickel. Disputes around dividend payments of Norilsk Nickel started in 2008, when RUSAL became a shareholder of the company. RUSAL - as a company burdened with debts - wants consistent and high payments, while Potanin thinks that Norilsk Nickel should better spend the money on investment projects and development, so it should pay less dividends. At the same time, Interros that owns 34.57% in Norilsk Nickel and RUSAL that owns 27.82% previously reached a shareholder agreement. The agreement is in force until 2023 and it prohibits any shareholder from unilateral changes in the company’s dividend policy.

UAZ, Ford Sollers CEO appointed as CEO of Aurus On June 11, 2019 it was stated that Adil Shirinov, CEO of carmaker UAZ, part of ’s Sollers group, and joint venture Ford Sollers, had been appointed as CEO of Aurus luxury cars brand. Shirinov replaced Gerhard Hilgert, who had occupied the position since 2018.

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Lukoil buys back RUB 2.1 bln shares, USD 2.9 mln GDRs on June 3-7, 2019 On June 11, 2019 it was reported that Securities Limited, a unit of Russian oil major Lukoil, paid RUB 2.066 bln to buy 399,758 shares and USD 2.91 mln to buy 367,170 global depositary receipts (GDRs) from the open market on May 27-31. Lukoil bought the securities at the weighted average price of RUB 5,169 per share and of USD 79.28 per GDR. In August 2018, Lukoil announced USD 3 bln buyback program that would be valid through December 30, 2022

Court orders Baring Vostok to sell 9.99% stake in Oriental Express On June 11, 2019 the Arbitration Court of the Amur Region ruled that fund Baring Vostok must immediately sell a 9.99% stake in Orient Express Bank to Finvision of Artyom Avetisyan. An official of the fund said that Baring Vostok will contest the decision. On May 17, the court ordered Evison Holdings Limited, which represents interests of fund Baring Vostok, to sell the 9.99% stake in Orient Express Bank to Avetisyan’s Finvision Holdings. The decision did not come in force but Finvision sent a motion for immediate fulfillment of the court order. In February, the Basmanny District Court of arrested businessman Michael Calvey, founder of Baring Vostok, and five other defendants for two months over alleged RUB 2.5 bln embezzlement from Orient Express Bank. In April, Calvey was released under house arrest, and it was prolonged until July 14. Investigators believe that Calvey, his partner Phillippe Delpal, and several other unidentified managers convinced shareholders of Orient Express Bank to vote for a compensation agreement to receive a 59.9% in International Financial Technology Group instead of money. The shares were valued at RUB 3 bln under the deal, while their real value amounted to RUB 600,000.

Inter RAO 2018 dividends not to change on stake sale On June 13, 2019 it was reported that Russian power holding Inter RAO would not change the amount of dividends for 2018 after deciding to allocate to dividends some funds from the sale of a stake in subsidiary Irkutskenergo, and would keep them at RUB 17.9 bln. In May, the shareholders of Inter RAO approved paying RUB 0.17 per share, or a total of RUB 17.92 bln, in dividends for 2018. The payment accounts for 25% of the company’s net profit calculated under International Financial Reporting Standards (IFRS). State- owned holding Rosneftegaz holds 27.63% in Inter RAO, Federal Grid Company of Unified Energy Systems (FGC UES) has 9.24%, Inter RAO Capital owns 29.39%, and free float accounts for 33.74%. Inter RAO sold a 40.285% stake in Irkutskenergo to the Telmamskaya GES power plant owned by EuroSibEnergo, part of Oleg Deripaska’s En+ Group, for 70 bln in 2016.

Sberbank to sell 10% in Uralkali at RUB 89 per share under buyout offer On June 13, 2019 it was stated that Russia’s largest lender Sberbank would sell a 10% stake in fertilizer producer Uralkali at RUB 89.3 per share to Cyprus-based Rinsoco Trading Co of businessman Dmitry Lobyak under a mandatory buyout offer sent in March. In December 2018, Sberbank said that its subsidiary Sberbank Investments acquired a 10.18% stake in Uralkali from Rinsoco Trading, which retained direct control over another 10.18% stake in Uralkali.

Dividends/coupons GAZ Group can pay RUB 3.92 per preferred share in dividends for 2018 On June 7, 2019 the board of directors of Russian automaker GAZ Group recommended paying RUB 3.92 per preferred share and no dividends on common shares for 2018. In 2017, GAZ paid RUB 4.39 per preferred share in dividends.

NLMK holders approve paying RUB 7.34 per share in January-March 2019 dividends On June 7, 2019 shareholders of Russian steelmaker (NLMK) approved paying RUB 7.34 per share in dividends for January-March. The record date was set for June 19. NLMK paid RUB 5.73 per share in dividends for January-March 2018. Vladimir Lisin holds around 84% in NLMK through Fletcher Group.

Norilsk Nickel shareholders approve RUB 792.52 per share in dividends for 2018 On June 10, 2019 it was reported that shareholders of Russian metals giant Norilsk Nickel approved paying RUB 792.52 per common share, or a total of RUB 125.4 bln, in dividends for 2018. The record date is June 21. The company earlier paid RUB 776.02 per common share, or a total of RUB 122.8 bln, in interim dividends for 2018.

Mostotrest owners vote for paying no 2018 dividends On June 10, 2019 shareholders of Russian construction company Mostotrest decided against paying dividends for 2018 in order to leave RUB 2.992 bln net profit for the year undistributed. Previously, the

2 company paid RUB 3.003 bln, or RUB 10.64 per common share, in total dividends for 2017, and the same total amount for 2016. TFK-Finance of tycoon Arkady Rotenberg owns 94.2% in Mostotrest, and free float accounts for 5.8%.

Severstal to pay RUB 35.43 per share in dividends for January-March 2019 On June 10, 2019 it was reported that shareholders of Russian steelmaker approved paying RUB 35.43 per share in dividends for January-March. In 2018, Severstal paid RUB 38.32 per share in dividends for January-March, RUB 45.94 per share in dividends for April-June, and RUB 44.39 per share in dividends for July-September and RUB 32.08 for October-December. Severstal’s key beneficiary is Alexei Mordashov, with 77.03% shares.

TCS Group suspends dividend payments till end-2019 On June 11, 2019 it was announced that Russian TCS Group, which includes and Tinkoff Insurance, would suspend dividend payments until the end of 2019.

TGC-2 holders approve RUB 0.00064 per share in dividends for 2018 On June 11, 2019 shareholders of Russian power producer Territorial Generating Company-1 (TGC-1) approved paying RUB 0.00064 per share, or a total of RUB 2.485 bln, in dividends for 2018, a 31% rise on the year. The record date is June 26. For 2017, the company paid RUB 1.888 bln, or RUB 0.00049 per share, in dividends.

Transneft managers expect dividends for 2018 at RUB 10,400 per share On June 11, 2019 Rashid Sharipov, Vice President of Russian pipeline monopoly Transneft, stated that the company’s managers expect dividends for 2018 to amount to RUB 10,400 per share. For 2017, Transneft paid RUB 82.5 bln, or 50% of the adjusted net profit, in dividends. Deputy Prime Minister Dmitry Kozak said earlier in June that the government had made no final decision on Transneft’s dividends for 2018, the general approach to state-owned companies is 50% of the net profit. Kozak said in May that Transneft’s expenses after the incident would be taken into account while setting the company’s dividends. Finance Minister Anton Siluanov said that the idea to reduce the dividends was wrong. The problem with the quality of oil coming from Russia to Europe across via the Druzhba pipeline appeared in April. Good-quality oil deliveries resumed in early May, but there is still much dirty oil in the facility.

Bashneft holders approve paying RUB 158.95 per share in dividends for 2018 On June 11, 2019 shareholders of Russian oil company Bashneft approved paying RUB 158.95 per common and class A preferred share in dividends for 2018, unchanged on the year. The company will pay a total of RUB 28.2 bln, which accounts for 29% of the 2018 International Financial Reporting Standards (IFRS) net profit.

Inter RAO to allot RUB 7.9 bln from Irkutskenergo sale on 2018 dividends On June 11, 2019 it was reported that Russian power holding Inter RAO planned to allocate RUB 7.922 bln, a part of money received from the sale of subsidiary Irkutskenergo, to final dividends for 2018. The total sum of the dividends remains unchanged. In late May, the shareholders of Inter RAO approved paying RUB 0.17 per share, or a total of RUB 17.92 bln, in dividends for 2018. The payment accounts for 25% of the company’s net profit calculated under International Financial Reporting Standards (IFRS). State-owned holding Rosneftegaz holds 27.63% in Inter RAO, Federal Grid Company of Unified Energy Systems (FGC UES) has 9.24%, Inter RAO Capital owns 29.39%, and free float accounts for 33.74%.

WGC-2 holders approve doubling 2018 dividends on year to RUB 0.0368 per share On June 13, 2019 shareholders of Russian power producer Wholesale Generating Company-2 (WGC-2) approved more than doubling dividends on the year to RUB 0.0368 per share for 2018. The company will pay a total of RUB 3.902 bln, or 35% of the Russian Accounting Standards (RAS) net profit, in dividends. The record date is June 28. For 2017, WGC-2 paid 26% of the net profit, which amounted to RUB 1.73 bln, or RUB 0.0163 per share, in dividends.

Eurobonds / DRs Finance ministry to place Eurobonds for 2nd time 2019 on better terms On June 10, 2019 Konstantin Vyshkovsky, head of the state debt department of the Finance Ministry, said that Russia may place Eurobonds for the second time in 2019 only if the conditions improve as compared with the start of the year. On March 21, the ministry placed USD 3 bln 2035-Eurobonds at 5.1% and EUR 750 mln of 2025-Eurobonds at 2.375%.

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Black Sea Development Bank to hold road shows for dollar Eurobonds on June 13, 2019 On June 11, 2019 a banking source said that Black Sea Trade and Development Bank planned to hold road shows for a possible placement of U.S. dollar-denominated Eurobonds with a maturity of three to five years on June 13, 2019. The meeting with investors will be held in Europe and Asia. HSBC, J.P. Morgan and Societe Generale will be the organizers.

GeoProMining to place USD 300 mln debut Eurobonds at 7.75% On June 11, 2019 a banking source said that Russian gold and non-ferrous metals producer GeoProMining would place USD 300 mln of debut 5-year Eurobonds with the yield of 7.75% annually. Demand for the bonds exceeded USD 400 mln. The initial yield guidance was set at about 8% annually. GeoProMining held a road show for the issue in Switzerland, Germany, Moscow, and London starting from June 3. Citi, VTB Capital, and Sberbank CIB are the organizers.

Please be advised that the information presented in this newsletter is based on the following sources: National Settlement Depository (NSD); Clearstream Banking; Euroclear Bank; PRIME-TASS information agency; “Kommersant”, "Rossiyskaya Gazeta”, “Izvestiya, "Vedomosti”, “The Moscow Times“ newspapers, and others.

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