SSEECCUURRIIITTIIIEESS MMAARRKKEETT NNEEWWSSLLEETTTTEERR weekly Presented by: VTB Bank, Custody January 10, 2019 Issue No. 2019/01 Company News Central bank allows Dixy Group not to disclose corporate information On December 27, 2018 it was announced that the central bank had freed Russian released Dixy Group from an obligation to disclose corporate and financial information. In October, the company’s subsidiary Dixy Yug said that it finished a buyback of shares of Dixy Group, and controlled a 48.44% stake in the company as of October 5. Taking into account the stakes of affiliated firms, including a 51.29% stake owned by Dixy Holding Limited of businessman Igor Kesayev’s Mercury Holding, the company controls 100% of its shareholder equity. The Moscow Exchange stopped trading shares of Dixy Group on June 28, and the shareholders of Dixy Group approved a decision to make the company private on November 28. MegaFon offers RUB 659.26 per share buyback price to minorities On December 27, 2018 it was reported that Russian mobile operator MegaFon offered minority holders to sell their shares for RUB 659.26 apiece under a buyback. The offer is valid for 70 days, or starting from December 28 through March 7, 2019. It covers 131.213 mln common shares, accounting for 21.16% of MegaFon’s capital. The operator’s subsidiary, MegaFon Finance, cancelled on December 10 all general depositary receipts, ensuring rights for common shares of the operator, and filed a mandatory offer for a share purchase to the central bank for consideration. As a result of the cancellation, MegaFon Finance became an owner of 139,616,537 common shares of MegaFon, which with the shares held by its affiliated firms, amounted to 78.84% of the operator’s capital. Sberbank CIB CEO to quit for UralChem on January 15, 2019 On December 27, 2019 it was stated that Igor Bulantsev, CEO of top bank Sberbank’s corporate arm Sberbank CIB, would leave his post and become CFO of fertilizer producer UralChem on January 15. Sberbank and UralChem declined to comment. In September, business daily Kommersant reported that Bulantsev would leave Sberbank CIB until the end of the year as Sberbank plans to integrate the subsidiary with the bank’s corporate block. But a representative of Sberbank CIB told the business daily then that the information was incorrect. Bulantsev is not the only top Sberbank manager to leave the financial sector. Alexander Torbakhov who recently left the position of Sberbank’s deputy CEO for the retail business, may become a member of the board of directors of retailer X5 Retail Group. RUSAL appoints Independent Director Thomas as board chairman On December 28, 2019 it was announced that Russian aluminum producer RUSAL appointed Independent Director Jean-Pierre Thomas as the chairman of the board of directors. The decision will enter in force from January 1, 2019. Thomas was appointed as an independent director in June. According to a Reuters report, the appointment of a new chairman was part of a deal to lift the U.S. sanctions from the company. RUSAL’s shares rose by 5.6% to RUB 30.94 as of 11:44 a.m., Moscow time. TGC-2 says board approves share issue, reduction of equity On December 28, 2018 the board of directors of Russian power utility Territorial Generating Company-2 (TGC-2) approved an issue of 1.458 tln common shares and 16.501 bln preferred shares that would be converted into shares with a lower face value in order to reduce the shareholder equity. Currently, TGC-2’s shareholder equity amounts to about RUB 14.75 bln and is split into 1.458 tln common shares and 16.5 bln preferred shares with a face value of 1 kopeck each, while the face value of the additional common and 1 preferred shares will stand at 0.065271 kopeck. As a result, the company’s shareholder equity will be reduced to RUB 962.7 mln. Bank Trust starts merger with Avtovazbank On December 28, 2018 the central bank said that Russia’s Bank Trust started a process of merger with Avtovazbank. A bank of non-core assets is expected to be created on the basis of Bank Trust to consolidate RUB 2.1-2.2 tln of assets of banks that are being bailed out for their further sale. Assets of Otkritie Financial Corporation (FC) Bank, B&N Bank, Rost Bank, Avtovazbank, and part of Promsvyazbank’s assets will be transferred to the new bank. Alliance Rostec finishes mandatory buyback of AvtoVAZ shares On December 29, 2018 it was announced that Alliance Rostec, a joint venture between state industrial holding Rostec and Renault -Nissan Alliance, on December 26 finished the mandatory buyback of Russian car producer AvtoVAZ’s shares from minority holders to raise its stake to 100%. The buyback is a final stage of a recapitalization program started in December 2016. Lukoil buys back 1.8 bln shares, USD 27 mln GDRs on December 24-28, 2018 On January 9, 2018 it was stated that Lukoil Securities Limited, a unit of Russian oil major Lukoil, paid RUB 1.842 bln to buy 372,355 shares and USD 26.671 mln to buy 371,255 global depositary receipts (GDRs) on the open market in the period from December 24 through December 28. Lukoil bought the shares at an average price of RUB 4,946 per share and the GDRs at an average price of USD 71.84 per security. In August 2018, Lukoil announced the start of a USD 3 bln buyback program that will be valid through December 30, 2022. FESCO’s board approves sale of 0.003% of treasury shares On January 9, 2019 it was reported that the board of directors of Russia’s Far Eastern Shipping Company (FESCO) approved selling its 0.003% stake, or 92,098 treasury shares of the company, at a meeting held on December 29, 2018. According to the latest quarterly report of the company, its shareholder equity is split into 2.951 bln shares, of which FESCO owns 92,098 shares. CEO says capital of merged Otkritie FC Bank at RUB 315 bln On January 9, 2019 Mikhail Zadornov, CEO of Otkritie Financial Corporation (FC) Bank, said that the capital of the bank after its merger with B&N Bank amounts to RUB 315 bln, one of the largest in the Russian banking system. Zadornov also said that Otkritie FC Bank would rank fourth or fifth by assets among Russian banks. In October, the CEO said that the new Otkritie FC Bank’s assets would reach RUB 2.3-2.4 tln by January 1. Otkritie FC Bank and B&N Bank were bailed out by the central bank from summer 2017. In February 2018, the regulator unveiled its intention to merge the banks aside from their bad and non-core assets. The merger officially finished on January 1, 2019. VTB Bank says acquires 71.8% in Zapsibkombank On January 10, 2018 it was reported that Russia’s second largest VTB Bank acquired 71.8% in the Tyumen Region-based West Siberian Commercial Bank (Zapsibkombank). Zapsibkombank will be fully merged with and rebranded as VTB in 2020. In late 2018, the supervisory board of VTB Bank approved an acquisition of at least 71.8% of Zapsibkombank’s common shares, at least 19.9% of its preferred shares with dividends of 30% annually, and at least 18.8% of preferred shares with dividends of 100% annually. On January 9, VTB said it acquired 81.1% in Sarovbusinessbank in Nizhny Novgorod on the Volga. The bank has said that the acquisitions should help it improve business in the two Russian regions. Dividends/coupons GV Gold says to pay RUB 1.9 bln in January-September 2018 dividends On December 28, 2019 shareholders of Russia’s gold producer GV Gold approved paying RUB 1.9 bln, or RUB 34.834 per share, in dividends for January-September. The record date is January 17, 2019. In April, GV Gold approved a new dividend policy, under which it will calculate dividends on the basis of earnings before interest, taxes, depreciation, and amortization (EBITDA). The company will pay 30% of EBITDA in dividends if net debt/EBITDA ratio is below 2.5, up to 20% of EBITDA if net debt/EBITDA ratio is 2.5-4.0, and will not pay any dividends if the ratio is over 4.0. The company already paid RUB 1.02 bln, or RUB 18.551942 per share, in dividends for January-June. Board members Sergei Dokuchayev, Valerian Tikhonov, and Natalya Opaleva each hold 20.36% in the company. 2 TCS Group to cut dividends to 30% from 50% of IFRS net profit from April 2019 On December 28, 2019 the board of directors of Russia’s TCS Group, which includes Tinkoff Bank and Tinkoff Insurance, approved a new policy reducing dividend payment to 30% from 50% of the International Financial Reporting Standards (IFRS) net profit from April 1, 2019. The decision in linked to tighter legal requirements and the necessity of keeping sufficient capital provisioning. Eurobonds / DRs Mosenergo to delist ADRs from LSE from March 29, 2019 On December 27, 2018 it was reported that Russian power utility Mosenergo would delist American depositary receipts (ADRs) from the London Stock Exchange from March 29, 2019 due to low liquidity. The company will keep supporting depositary receipts programs under an agreement with The Bank of New York Mellon. Mosenergo also said that the most of its depositary receipts are traded on the Frankfurt Stock Exchange. VEON to buy back 3 issues of Eurobonds for USD 779.7 mln On December 28, 2018 it was stated that Amsterdam-based VEON, the sole owner of Russian mobile operator VimpelCom, would buy back Eurobonds maturing in 2021, 2022, and 2023 for USD 779.7 mln in total.