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Presented by: VTB Bank, Custody

January 24, 2019 Issue No. 2019/03

Company News

En+ Group appoints 3 people to vote with Deripaska’s shares On January 18, 2019 it was reported that energy and metals holding En+Group appointed three people who would vote for the stake received from businessman under a deal with the U.S. government to remove sanctions against the company. En+ Group said that Mr David Knower, Mr David Crane and Mr D. J. Baker had been identified as independent individuals who might, subject to the satisfaction of certain conditions, exercise the voting rights attaching to certain shares of the company, as required by the U.S. Department of the Treasury's Office of Foreign Assets Control. Deripaska’s stake will fall to 44.95% from about 70%, and he will be able to vote for no more than 35% of the shares. Independent directors will get eight out of 12 seats in the new board of directors of En+Group. Half of them will be U.S. and U.K. citizens. The company confirmed reduction of Deripaska’s stake below 50%. In April, the U.S. imposed sanctions against 38 Russian tycoons, officials and companies including Deripaska and his assets. In December, the Treasury said it would lift the sanctions imposed on En+ Group and EuroSibEnergo, as well as RUSAL in 30 days, but would retain sanctions against Deripaska personally. A resolution against the lifting of sanctions was made by Senator Chuck Schumer, who said that Deripaska would keep real control over the companies even after fulfilling the U.S. demand to reduce the stake, its consideration was approved by the Senate and the resolution was approved by the House of Representatives.

Abramovich, Abramov representatives become members of TransContainer board On January 18, 2019 it was announced that representatives of companies affiliated with tycoons and , including Yenisei Capital, had been appointed to the board of directors of Russian container shipping operator TransContainer. Russian Railways controls 50% plus two shares in TransContainer, while Yenisei capital owns 24.5%, and VTB Bank owns 24.8%. Yenisei Capital initiated an extraordinary general meeting to reelect the operator’s board of directors. Yenisei Capital appointed two people that were previously on the board - David Davidovich, deputy CEO of Abramovich’s Millhouse, and Sergei Ludin, managing director at CIS Investment Advisers - a company affiliated with Abramov according to media reports. The shareholders also approved candidates suggested by VTB Bank - Lea Verni, chairman of the board of directors of Zoltav Resources, CIS Investment Advisers Vice President Maxim Gavrilenko, and Inventure Partners Managing Partner Yevgeny Zaltsman. Representatives of Russian Railways occupied the remaining six seats on the board of directors of TransContainer. Previously, media reported that VTB Bank, which bought 24.8% in the company from Far Eastern Shipping Company (FESCO), would only act as a middle man and resell the stake to affiliates of Abramovich and Abramov in the future.

Sovcombank holders approve raising charter capital by RUB 100 mln On January 18, 2019 shareholders of ’s Sovcombank approved raising the charter capital by RUB 100 mln to RUB 1.971 bln by issuing new shares. The new shares will be sold to the Russian-Japanese Investment Fund, RDIF Investment Management’25, Saudi Arabia’s Ayar International Investment Company, Bahrain Mumtalakat Holding Company and other foreign investors.

ChelPipe board members become direct owners of shares On January 21, 2019 it was announced that Andrei Komarov and Alexander Fyodorov, members of the board of directors of Russia’s Chelyabinsk Pipe-Rolling Plant (ChelPipe), became direct owners of the plant’s shares earlier owned by two offshore firms. Komarov became the owner of 49.4% shares earlier owned by Arbordeen International Limited, while Fyodorov received 6.9% shares owned by Poweredge Holdings Ltd.

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Taking into account indirect ownership of ChelPipe shares through Pervouralsk New Pipe Plant, Komarov and Fyodorov jointly control over 80% of ChelPipe.

Renova Group sells 47% stake in Baikal Holding On January 21, 2019 it was stated that subsidiaries of Russian tycoon ’s multi-industry holding had sold their combined 47% stake in bottled water producer Baikal Holding. As of late November 2018, Baikalskaya Glubinnaya owned 53% in Baikal Holding, Renova Aktiv owned 32.36%, Renova-Holding Rus owned 14.5%, and Ream Management of businessman Mikhail Sivoldayev had a 0.14% stake. But at the end of December, Ream Management’s stake in the company rose to 47%, while Baikalskaya Glubinnaya’s stake remained at 53%. Details of the deal were not disclosed.

Central bank to offer RUB 79.4 bln coupon bonds on January 22, 2019 On January 21, 2019 it was reported that the Russian central bank would offer RUB 79.373 bln of coupon bonds of two issues at an auction on January 22. The regulator will offer RUB 72.961 bln bonds maturing on April 17, and RUB 6.412 bln bonds maturing on March 13. The settlement date is January 23. The coupon on the bonds equals the central bank’s key rate for each day of a coupon period.

Transneft moves controlling stake in NCSP to Russian jurisdiction On January 22, 2019 it was declared that Russian oil pipeline monopoly Transneft moved its 50.11% controlling stake in Novorossiysk Commercial Sea Port (NCSP) from Cyprus-based Novoport offshore zone to the Russian jurisdiction on January 21. Transneft holds an additional 11.89% in NCSP indirectly through Transneft-Servis and NCSP-Capital.

Lukoil buys back RUB 485.4 mln shares, USD 3.7 mln GDRs on January 14-15, 2019 On January 22, 2019 it was stated that Securities Limited, a unit of Russian oil major Lukoil, buys back 93,712 shares for RUB 485.4 mln and 47,928 global depositary receipts (GDRs) for USD 3.686 mln on the open market on January 14-15. Lukoil bought the securities at an average price of RUB 5,180 per share and of USD 76.91 per GDR. In August 2018, Lukoil announced the start of USD 3 bln buyback program that will be valid through December 30, 2022.

Zapsibcombank to appoint Alexander Surin from VTB as CEO On January 22, 2019 it was stated that Alexander Surin from VTB Group would be appointed as CEO of Zapsibcombank on January 23, VTB, which owns 71.8% in Zapsibcombank. Dmitry Goritsky, former CEO of Zapsibcombank, was appointed as chairman of the board of directors.

Rostelecom board re-elects president ecology envoy Ivanov as chairman On January 23, 2019 it was announced that the board of directors of Russian state-controlled telecom operator Rostelecom had re-elected Sergei Ivanov, a special representative of President Vladimir Putin for environment protection, as its chairman. Ivanov has been heading Rostelecom’s board since June 2015. The official was a deputy prime minister in 2008-2011 and later chief of presidential staff until 2016.

Court turns down RUB 8 bln suit of Magomedovs’ company versus VTB Bank On January 23, 2019 it was reported that the Arbitration Court had turned down RUB 8 bln suit of GlobalElektroServis, part of multi-industry holding Summa Group of brothers Ziyavudin and Magomed Magomedov, against Russia’s second largest bank VTB. In the suit, Cyprus-registered company E-Seven Limited - 99% owned by GlobalElektroServis - asked the court to void four credit agreements signed in 2013- 2014 by GlobalElektroServis with Bank of Moscow, VTB’s predecessor, and also to void several guarantee agreements. E-Seven Limited acted as a guarantor on several contracts, and thought that GlobalElektroServis conducted deals with violations of corporate approval procedures. VTB Bank did not acknowledge the suit, and the bank’s representative said that he had the proof that the deals passed all the necessary corporate approval by the management of GlobalElektroServis.

Alfa-Bank board decides to merge with Baltiyskiy Bank On January 23, 2019 it was stated that the board of directors of Alfa-Bank had decided to merge with Baltiyskiy Bank, which it was bailing out. The shareholders will vote on the issue until January 26. Alfa-Bank acquired 89.9% in Baltiyskiy Bank under bailout procedures on October 14, 2014. Alfa-Bank was appointed by authorities to incorporate Baltiyskiy Bank until 2020. The bank was earlier controlled by businessmen Oleg Shigayev and Marina Drobyazko, each of them owning 49.877%.

T Plus still mulls merger with Gazprom Energoholding On January 24, 2019 it was announced that Russian power producer T Plus, a unit of tycoon Viktor Vekselberg’s Renova Group, continued to discuss a merger of assets with Gazprom Energoholding. In

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October 2018, Vekselberg said that the companies were making an appraisal of assets and plan to complete it by the end of the year. Gazprom Energoholding CEO Denis Fyodorov said in late 2018 that the holding was interested only in a controlling stake after the merger with T Plus. T Plus and Gazprom Energoholding discussed the merger already in 2011, but the deal was blocked by the Federal Antimonopoly Service at that time.

Dividends/coupons PhosAgro to pay RUB 9.324 bln of undisbursed profit in dividends On January 23, 2019 shareholders of Russian fertilizer producer PhosAgro approved paying RUB 72 per share, or a total of RUB 9.324 bln of undisbursed profit in interim dividends for 2018. The record date for dividends is February 4. In October 2018, the company’s shareholders approved paying RUB 5.83 bln of undistributed profit, or RUB 45 per common share and RUB 15 per global depositary receipt (GDR), in dividends for April-June 2018, and the company also paid RUB 3.11 bln in dividends for January-March 2018. In 2017, PhosAgro paid RUB 8.5 bln in interim dividends, and RUB 1.943 bln in final dividends. The company’s dividend policy envisages paying 30-50% of the International Financial Reporting Standards (IFRS) net profit. Former Senator Andrei Guryev and members of his family hold 48.48% in PhosAgro, Vladimir Litvinenko owns 19.35%, Board of Directors Member Igor Antoshin holds 6.3%, and free-float is 25.87%.

VTB to pay less than 50% of IFRS net profit in 2018 dividends On January 24, 2019 Andrei Kostin, CEO of Russia’s second largest lender VTB Bank, stated that the bank would likely pay less than 50% of net profit under International Financial Reporting Standards (IFRS) in dividends for 2018 and plans to return to payments of 50% of net profit in 2019. Kostin also said that acquisition of Vozrozhdenie Bank would not have a significant impact on the bank’s financial performance under IFRS. VTB is ready to transfer defense loans to Promsvyazbank despite certain financial losses as a result of this process.

Mikhelson says Arcticgas to begin paying dividends in 2019 On January 24, 2019 , CEO and core owner of Russian gas producer , said that Arcticgas, a joint venture between Novatek and oil major , would begin paying dividends in 2019. Mikhelson also said that the dividends would considerably increase Novatek’s net profit.

Eurobonds / DRs Alfa-Bank to hold road show of ruble Eurobonds on January 28, 2019 On January 24, 2019 a banking source said that Russia’s Alfa-Bank planned to hold a road show of ruble- denominated Eurobonds in London on January 28. The bank may place Eurobonds for three to five years depending on market conditions. Alfa-Bank and J.P. Morgan will act as 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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