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Presented by: VTB Bank, Custody

June 8, 2017 Issue No. 2017/21

Company News

Summa eyes consolidating 100% in UGC during On June 2, 2017 Leila Mammed Zade, CEO of Russian multi-industry holding Summa, stated that the group was interested in consolidating a 100% stake in the United Grain Company (UGC) and would participate in its privatization. The government, which holds 50% plus one share in UGC, plans to privatize the company in 2017-2019. Summa owns a 50% minus one share stake.

TMK may offer more extra shares to reduce debt On June 2, 2017 Vladimir Shmatovich, deputy CEO for strategy at Russian oil and gas pipe producer TMK, said that the company might make a new additional share offering in order to reduce its debt. Holding SPO in February allowed the company to raise liquidity of its shares to 30% from 17%. The company believes this will bring effect and allow us to hold the next SPO at a higher price. TMK may offer Eurobonds worth USD 400-500 mln by the end of this year.

Gazprom Neft approves RUB 65.36 mln new shares of refinery On June 5, 2017 the board of directors of Neft, the oil branch of Russian gas producer Gazprom, approved the purchase of RUB 65.36 mln worth of new shares of its affiliate, the Moscow Refinery.

Mail.Ru Group’s board joined by 3 executives from major holder MegaFon On June 5, 2017 it was reported that shareholders of Russian Internet giant Mail.Ru Group endorsed a new lineup of its board of directors, which comprised three representatives of its major holder, mobile operator MegaFon, including CEO Sergei Soldatenkov. The two other new members are MegaFon Chief Operating Officer Anna Serebryanikova and Chief Commercial Officer Vlad Wolfson. Mail.Ru Group’s co-founder Dmitry Grishin was re-elected as the board’s chairman. At the beginning of 2017, MegaFon acquired 63.8% of voting shares of Mail.Ru Group for USD 740 mln.

Polyus to offer 7% of shares in SPO on London, Moscow exchanges On June 5, 2017 it was announced that gold producer plans to offer 7% of its shares under a secondary public offering (SPO) on the and the . A banking source said that the company started a pre-marketing campaign and would hold a roadshow for the offering in the next two weeks. Another financial source said that the price range would be announced next week. About USD 400 mln worth of new shares and existing securities, including global depositary receipts (ADRs) trading in London, are expected to be offered. The company’s major shareholder Polyus Gold International Limited (PGIL) controlled by businessman Said Karimov and holding 91.73% in Polyus and Polyus Gold plc are the selling shareholders. , J.P. Morgan, Sberbank CIB and VTB Capital act as global co- coordinators and co-bookrunners, while BMO Capital Markets, Gazprombank and Morgan Stanley act as co- bookrunners. PGIL may provide an option for 10% of the offering to organizers. Polyus will use the funds for debt repayment, funding operating activities and fields development projects, capital expenditure and other general corporate purposes.

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Sistema says ’s suit hurts capitalization of company On June 5, 2017 Mikhail Shamolin, President of multi-industry holding , said that a RUB 106.6 bln suit of oil companies Rosneft and Bashneft against Sistema hurt its capitalization. In May, Rosneft filed the suit seeking to recover an alleged loss incurred by Sistema and its unit Sistema-Invest, which Rosneft believes were involved in asset stripping of Bashneft in 2009-2014, when they owned a controlling stake in the company. On May 24, Rosneft requested the Arbitration Court of the republic of Bashkortostan to raise claims under the suit to RUB 170.6 bln. Sistema still believes that the claims are illegal and plans to stand its ground and use all possible legal ways for that. Sistema transformed Bashneft into one of the best performing oil companies and improved its value for all investors and counteragents, including as a receiver of taxes, and the next owner of the company. Shamolin said that all corporate actions mentioned in the suit were aimed at maximizing Bashneft’s value prior to a potential IPO at international markets. Reorganization of Bashneft was done specifically with that goal in mind and in full compliance with Russian legislation. On June 2, Rosneft CEO Igor Sechin said that an amicable deal with Sistema was possible. Shamolin said that Sistema was ready to discuss the amicable deal, but there had been no dialogue between the companies.

Renova Group seeks control over Petropavlovsk On June 5, Kommersant business daily reported that multi-industry holding of businessman would endeavor to obtain control over Petropavlovsk Plc, which operates gold deposits in Russia and in which Renova holds a 22.34% share stake and a 6.88% convertible bond stake. The newspaper said that Renova and friendly funds Sothic Capital Management and M&G Debt Opportunities, part of Prudential, jointly holding about 40% in Petropavlovsk, require a change of the board of directors. According to the sources, if the companies win at the next, June meeting of shareholders, Zoloto Kamchatki, Renova and Petropavlovsk may merge. Moreover, some Kommersant’s sources said that preliminary talks are being held on a possible merger of the consolidated company with Russian tycoon ’s Highland Gold and GV Gold, belonging to owners of Lanta Bank, including businessman Sergei Dokuchayev. Renova reportedly needs the deals to protect investment amid controversies with Petropavlovsk’s founders Peter Hambro and Pavel Maslovsky holding over 9% and to raise Zoloto Kamchatki’s liquidity. A source said that Renova would need support of the minority holders as it was unable to vote. Another source added that the Kamchatka-based company might be valued at USD 500 mln. The completion of Petropavlovsk’s project to build a pressure oxidation chamber until 2019 may become a key factor of consolidation with Highland Gold. GV Gold may be interested in Petropavlovsk’s listing on the stock market. The companies declined to comment. A spokesperson for Highland Gold said the information was market speculations, and a source close to Renova said the company did not need any assets and it was not in talks with anyone.

Novatek buys back 359,000 common shares on May 29-June 2, 2017 On June 5, 2017 it was reported that Russian independent gas producer bought back 163,000 common shares, including in the form of global depositary receipts (GDRs), from May 29 through June 2. Novatek announced USD 600 mln buyback program in June 2012 with possible prolongation. The program has been rolled over annually since then and on May 10, prolonged until June 7, 2018.

UralChem says sale of TogliattiAzot shares is impossible On June 6, 2017 a representative of fertilizer producer UralChem, an owner of a minority stake in Russian fertilizer company TogliattiAzot, said that the plant’s shares cannot be put for sale due to a court decision that seized management rights of shares and property of the plant. Earlier on June 5, business daily reported citing sources that the family of Vladimir Makhlai was looking for a buyer of 71.5% in TogliattiAzot and Renaissance Capital had received a mandate for the sale of the stake in February. The representative said that the company had not received any purchase offers for the stake in TogliattiAzot. Under the fraud case launched in 2012 by UralChem court arrested in absentia TogliattiAzot’s Board of Directors Chairman Sergei Makhlai, his father Vladimir Makhlai, and Ameropa’s owner Andreas Zivy. Investigators estimated financial damage inflicted to the company at USD 3 bln, and seized RUB 12.5 mln worth of shares in TogliattiAzot.

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Qatari QIA denies buyback option in Rosneft sale agreement On June 8, 2017 it was reported that Qatar Investment Authority’s (QIA) contract to acquire a 19.5% stake in Russian oil major Rosneft had no buyback option. It was mentioned that according to the agreement, under which Rosneft’s shares had been sold, neither Rosneft nor Rosneftegaz nor the Russian government have the right to buy back the shares directly or indirectly. The consortium controls the future property corresponding to the shares exclusively. QIA added that it consulted with the best international legal, accounting and investment banking companies while structuring and closing the deal to ensure it is in line with all applicable U.S. and E.U. requirements and rules. The Wall Street Journal said the deal had a 10-year buyback option. It quoted sources as saying that buyback was discussed between Russian President Vladimir Putin and Qatari Emir Tamim bin Hamad Al Thani and they agreed that Russia will buy back at least part of the interest. The government sold the stake in Rosneft to a consortium of commodity trader Glencore and the QIA for EUR 10.5 bln in December 2016. On June 5 Egypt, Saudi Arabia, Bahrein and the United Arab Emirates declared a break in diplomatic relations with Qatar, accusing Doha of supporting terrorist organizations. The eastern part of Libya, Yemen, Maldives and Mauritius later said they broke relations with Doha as well.

Dividends/coupons VTB Bank may double dividends in 2017 On June 1, 2017 Andrei Kostin, CEO of Russia’s VTB Bank, stated that the bank might double dividend payments for 2017 if its net profit, calculated under International Financial Reporting Standards (IFRS), exceeds RUB 100 bln. He said that VTB bank would raise dividends proportionally to a rise in profit and would try to equate dividends on common and preferred shares. In 2016, the bank’s IFRS net profit jumped 30 times to RUB 51.6 bln and Russian Accounting Standards (RAS) net profit soared 44% to RUB 70 bln.

Transneft board recommends dividends for 2016, January-March 2017 On June 2, 2017 the board of directors of Russian oil pipeline monopoly recommended paying RUB 30.607 bln in dividends for 2016 and RUB 27.607 bln in dividends for January-March. Specifically, the board recommended paying RUB 4,296 per share in dividends for 2016 and RUB 3,875 per share in dividends for January-March. The net profit of the company rose 60% to RUB 232.9 bln in 2016, as calculated under International Financial Reporting Standards (IFRS) and more than doubled to RUB 30.6 bln under Russian Accounting Standards (RAS). Transneft paid RUB 12.801 bln in dividends for 2015.

NLMK to pay RUB 3.38 per share in dividends for October-December 2016 On June 2, 2017 it was reported that shareholders of Russian steelmaker (NLMK) approved paying RUB 3.38 per share in dividends for October-December 2016. The company already paid RUB 5.84 per share in interim dividends in 2016, so the combined dividend payment for 2016 will amount to RUB 9.22 per share, or a total RUB 55 bln. Shareholders also approved paying RUB 2.35 per share in dividends for January-March 2017. The record date for both payments is June 14. In January-March, the company’s net profit soared to USD 323 mln. In 2016, the net profit fell 3% to USD 935 mln, as calculated under International Financial Reporting Standards (IFRS). Businessman Vladimir Lisin owns 84% in the company.

WGC-2’s shareholders approve 0.825 kopecks per share in 2016 dividends On June 2, 2017 it was announced that shareholders of Russian power producer Wholesale Generating Company-2 (WGC-2) approved paying RUB 874.174 mln or 0.825 kopecks per share in dividends for 2016 at an annual general meeting. The record date for dividends is scheduled for June 20. In 2015, the company paid 0.567 kopecks per share in dividends. The company’s net profit amounted to RUB 3.497 bln in 2016, as calculated under Russian Accounting Standards (RAS). WGC-2 is controlled by Gazprom Energoholding, a subsidiary of gas giant Gazprom.

MOEK holders approve paying no dividends for 2016 On June 2, 2017 shareholders of the United Moscow Energy Company (MOEK) approved paying no dividends for 2016. The company did not pay dividends for 2015 as well. In 2016, MOEK posted RUB 929.5 mln net profit against RUB 498 mln net loss in 2015, as calculated under Russian Accounting Standards (RAS). Gazprom Energoholding owns a 90.048% stake in MOEK, MOEK-Finance holds 8.91%, other shareholders 1.042%.

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Novoship holders approve paying RUB 0.1 per share in 2016 dividends On June 2, 2017 shareholders of Russia’s Novorossiysk Shipping Company, or Novoship, approved paying RUB 0.1 per common and preferred share in final dividends for 2016. The total amount of dividends for 2016, including interim dividends, will reach RUB 19.8 per share. Novoship paid RUB 19.61 per share in dividends for 2015. Shipping company Sovcomflot owns 98.28% of the company’s common shares, or 89.3% of its charter capital.

Polyus may pay USD 254 mln in 2016 dividends, USD 100 mln special dividends On June 5, 2017 the board of directors of gold producer Polyus recommended paying 30% of earnings before interest, tax, depreciation and amortization (EBITDA) for July-December 2016 or USD 254 mln in ruble equivalent in dividends for 2016 and a special USD 100 mln dividend following the sale of a share in the Nezhdaninsky field. The shareholders will consider the recommendation at an annual general meeting scheduled for June 30.

Rostec CEO says AvtoVAZ may either do SPO or delist shares On June 5, 2017 Sergei Chemezov, CEO of state industrial corporation Rostec, stated that Russia’s largest carmaker AvtoVAZ might either carry out a secondary public offering (SPO) or delist its shares, but it was for Renault-Nissan to decide. Earlier this year, AvtoVAZ raised RUB 26.141 bln via placing 2.9 bln additional shares. As a result, the share of core owner Alliance Rostec - a joint venture between Renault-Nissan and Rostec - fell to 64.6% from 74.51%. In December 2016, Chemezov said that during a second stage of a capital boost program, which was to be completed until July 2017, the corporation and Renault-Nissan plan to convert RUB 83 bln debt of AvtoVAZ to the companies into shares of the carmaker. After that, Rostec will own 25% in AvtoVAZ, and Renault-Nissan will have about 75%. Rostec also plans to liquidate Alliance Rostec in a year or two and own the stake in AvtoVAZ directly. He also said that investment company Renaissance Capital, which owns 24.09% in AvtoVAZ through subsidiary Renaissance Securities, would leave its ownership in the carmaker at some point.

Shareholders of M.Video vote against paying dividends for 2016 On June 6, 2017 shareholders of electronic goods retailer M.Video approved paying no dividends for 2016 at an annual general meeting of shareholders. In 2015, the company paid dividends of RUB 20 per share or a total of RUB 3.6 bln.

NCSP CEO says dividends for January-March 2017 not on agenda On June 6, 2017 Sultan Batov, CEO of Russia’s Novorossiysk Commercial Sea Port (NCSP), said that the company was not so far considering paying dividends for January-March. NCSP’s shareholders recently approved paying RUB 0.779 per share, or a total of RUB 15 bln, in final dividends for 2016. The company already paid RUB 1 bln in dividends for January-March 2016 and RUB 8.994 bln for January-June. The combined amount of dividends for 2016 may reach RUB 24.994 bln. NCSP’s major shareholders are multi- industry holding Summa Group and oil pipeline monopoly Transneft which own 50.1% of the company on a parity basis. Transneft also controls another 10.5% of shares, and the Russian government holds 20% of shares that are to be privatized.

Russian Railways recommends paying 50% of net profit in 2016 dividends On June 7, 2017 Nikolai Podguzov, Deputy Economic Development Minister and board member of , stated that the company’s board of directors recommended paying 50% of the net profit, calculated under International Financial Reporting Standards (IFRS), or about RUB 5.1 bln in dividends for 2016. The company’s IFRS net profit amounted to RUB 10.294 bln in 2016.

Polyus board recommends paying RUB 20 bln in 2016 dividends On June 7, 2017 it was stated that the board of directors of Russian gold producer Polyus had recommended paying RUB 20.063 bln in dividends for 2016. The shareholders will consider the recommendation at an annual general meeting on June 30. In 2016, Polyus profit rose 53% to RUB 95.263 bln as calculated under International Financial Reporting Standards (IFRS). Companies of Suleiman and Said Kerimov are beneficiary owners of Polyus.

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Otkritie Holding may pay no dividends for 2016 On June 7, 2017 it was stated that the board of directors of Russian financial group Otkritie Holding, the parent company of Otkritie Financial Corporation (FC) Bank, had recommended paying no dividends for 2016 and account a RUB 32.042 bln net profit for the year as undistributed profit of 2017. The shareholders will discuss the recommendation at an annual general meeting on June 30, while the register for the meeting closes on June 18. Major shareholders of Otkritie Holding are its founder Vadim Belyayev with a 28.61% stake, IFD Capital and VTB Bank with 9.99%, ICT Group with 9.82%, Ruben Aganbegyan with 7.96%, and with 6.67%.

VTB 24 may pay RUB 0.2547 per share in dividends for 2016 On June 7, 2017 it was disclosed that the supervisory board of VTB 24, the retail arm of Russia’s second largest bank VTB, had recommended paying 25.47 kopecks a share or a total of RUB 28.876 bln in dividends for 2016. The record date for the dividends is July 20. Thus, the board had adjusted its previous recommendation issued on May 29, when it recommended paying RUB 26.017 bln or 22.95 kopecks per share in dividends for 2016. The shareholders will discuss the recommendation at an annual general meeting on June 30. VTB owns 99.9329% in VTB 24, and minority owners have the remaining 0.0671%.

Mechel may pay RUB 10.28 for preferred share in dividends for 2016 On June 7, 2017 it was stated that the board of directors of Russian metals and mining group had recommended paying no dividends on common shares and RUB 10.28 per preferred share, or a total of RUB 1.426 bln in dividends for 2016. The record date for the dividends is July 11. The shareholders will consider the recommendation at an annual general meeting on June 30. Mechel’s agreements with banks restrict dividends the company may pay and prohibits payment of dividends without creditor approval. Mechel had received its first net profit over several years in 2016 when it posted a RUB 7.126 bln net profit as calculated under International Financial Reporting Standards against RUB 115.163 bln net loss in 2015. In previous years the company paid RUB 0.05 per preferred share and no dividends on common shares. Mechel’s the core owner is Igor Zyuzin, chairman of the company’s board of directors, who owns 55.04% common shares. Mechel’s subsidiary Skyblock limited owns about 40% of preferred shares in the company, and about 60% of preferred shares are in free float.

MOESK holders approve paying RUB 1.5 bln in 2016 dividends On June 8, 2017 a spokesperson for the Moscow United Electric Grid Company (MOESK) said that the shareholders of the company had approved paying RUB 0.031 per share, or a total of RUB 1.52 bln in dividends for 2016. The company’s net profit fell 34% to RUB 6 bln in 2016, as calculated under Russian Accounting Standards (RAS), and decreased 25.62% to RUB 9.395 bln under International Financial Reporting Standards (IFRS). Part of power grid holding Rosseti, MOESK paid RUB 6.3 bln in dividends for 2015.

Eurobonds / DRs to offer USD 500 mln Eurobond at 3.85% On June 1, 2017 a banking source said that Russia’s metals giant Norilsk Nickel would offer USD 500 mln Eurobonds maturing in April 2022 with a 3.85% yield. The initial yield guidance stood at 4.125% and was later lowered to 3.8-3.9%. Demand for the securities exceeded USD 1.4 bln. Citi, Gazprombank, ICBC, Mizuho, Sberbank CIB, SG CIB and VTB Capital act as organizers.

Russian finance ministry plans no Eurobond offering next week On June 1, 2017 Minister Anton Siluanov told reporters that the Finance Ministry does not plan to offer Eurobonds next week. He said that the Ministry was working with consultants and is looking for and think about a better “window” to enter the market. He said that the issue was considered under a standard schedule. The Russian budget envisages placement of up to USD 7 bln in 2017. The Finance Ministry said earlier it planned to offer USD 3 bln worth of new securities and to swap USD 4 bln worth of the securities in circulation for new issues.

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Deripaska says En+ Group to raise USD 1.5 bln during IPO On June 2, 2017 Russian businessman told television channel Rossiya 24 that his En+ Group planned to raise about USD 1.5 bln during an initial public offering (IPO). He said that the company continued to consider an IPO and had bids from investors. Deripaska mentioned that that in case of attractive proposals, the company will most probably raise additional capital to redeem debts. He added that it was planned to rise about USD 1.5 bln. The company will make a final decision on the IPO within in 18 months and it will mainly depend on economic conditions. In April, the Financial Times reported citing sources that En+ Group hired six investment banks to organize an IPO on the London Stock Exchange (LSE) and plans to raise USD 1.8-2 bln. The banks are , JP Morgan, Credit Suisse, Societe Generale, Sberbank and VTB Capital. En+ Group holds 48.13% in aluminum giant UC and owns power utility EuroSibEnergo, among other assets.

Tinkoff Bank offers perpetual Eurobonds at 9.75% On June 8, 2017 it was reported that Russia’s was offering U.S. dollar-denominated perpetual Eurobonds with a yield guidance of 9.75%. The bank started a road show of the Eurobonds on June 2 in Russia and Europe. The subordinate issue encompasses an offer in 5.25 years. J.P. Morgan, UBS, BCP Securities, BCS Global Markets, Pareto Securities, brokerage company Region, and Renaissance Capital act as organizers. Simultaneously, Tinkoff Bank plans to buy back dollar-denominated Eurobonds that mature in 2018.

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”, ““ newspapers, and others.

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