The deales of the month

 Riza Abdurashitov

The lack of liquidity creates great number of prerequisites for purchase of the banks, but there is also high price expectation of the owners. After many years of silence the Masterbank was granted a bank license.  Last summer Metrokombank has received permission for conducting the banking activities in Kazakhstan. According to Yelena Bahmutova, the Deputy Chairman of the Agency of financial inspection, some more structures are in the process of the receiving the permission — the Company “Astana-Finance” and one of the Korean banks. 

The possible consolidation of the banking sector will reflect positively on the development of the country’s economy due to the growth of the business of banks, reduction of the expenses and other positive factors. The changed state of affairs in the world’s financial market can lead to the bank merger. In future the first-rate banks wouldn’t be able to grow dynamically at the expense of external loans; consequently, one of the possible ways for them would be the expansion of business by purchasing the small banks.

Bank Austria Creditanstalt, a member of the UniCredit European banking group, will become the 100% stockholder of the Kazakhstan’s commercial “ATFBank” before the end of the current year. The permission of the all regulating authorities has already been received. There are no obstacles for the conclusion of this deal. The price for the acquisition of the 100% of stocks of “ATFBank” is reported to be the $2,275 billion.

The stockholders of the “Caspian” bank are planning to take the new assets worth up to $1,5 billion. Michael Lomtadze, the Chairman of the board of management of “Caspian” bank said: “We’ve got heavy resources in the view of the stock and investment — it makes up minimum $1,5 billion which is in the hands of the stockholders of the “Caspian” bank. Therefore, we are interested in the specific investment which is not connected with the banking sector”. He noted that the interesting assets for the possible acquisition may be insurance, leasing company or brokerage house, pension fund.

Judging the statement of the Chairman of the board of management of “Caspian” bank, it is difficult for the bank to acquire another bank merely from the administrative point of view because they would have to integrate two banks. Therefore, the stockholders consider other financial services. According to Kazakhstan stock exchange (KASE), as for the 1st October of 2007 96,12% of the placed stocks (18 793 634 common and 321 180 preference) of the “Caspian” bank belong to the holding company Caspian Group B.V.(Amsterdam, the Netherlands). In Caspian Group B.V. 51% of the shares belong to the fund of the direct investment of the Baring Vostok Capital Partners and 49% belong to Vyacheslav Kim, the Chairman of the Board of Directors of the “Caspian” bank. Baring Vostok is a member of the Baring Private Equity International group controlling the funds of direct investment with assets worth $2,5 billion in Asia, India and CIS.

Mr. Kim,  now not Vyacheslav but Vladimir, the Chairman of the Board of Directors of Kazakhmys, sold 18,8% of the shares of Eurasian Natural Resource Corporation (ENRC) to Kazakhmys Plc. The cost of the option has made up $806,5 million.           

With the conclusion of the deal, Kazakhmys got access to the resources of chrome, iron ore, aluminum and coal. The financing of the purchase is realized at the expense of the personal funds of the Kazakhstan Company.
ENRC was founded at the end of 2006 by transforming the Eurasian industrial association; it merged the assets of the companies “Aluminum of Kazkhstan”, “Kazchrome”, “Sokolovsk-Sarbaisk ore mining and processing association”, “Kazakhstan electrolysis factory”, “Jayrem ore mining and processing enterprise”, “Eurasian energy corporation”, and also ENRC Logistics and ENRC Marketing & Sales. The 24,8% of the ENRC shares belongs to the government of the Kazakhstan.

Kazakhmys, the largest copper manufacturer in Kazakhstan, placed its shares on the London stock exchange in 2005 on behalf of Kazakhmys Plc. holding registered in Great Britain. Kazakhmys includes 4 manufacturing units: “Jezkazganswetmet”, “Balhashswetmet”, “Vostokswetmet”, Karagandaswetmet” and also has got oil and gold-mining subdivisions.

At the end of October the shares of Kazakhmys dropped on London stock exchange by 7,3% to 1377 pence — after the announcement about the reduction of the volume of iron manufacturing by the company. From January to September of 2007 Kazakhmys reduced production of cathode copper by 6% compared to the relevant period of the last year, to 277,1 thousand tons. According to the results of 2007, it is expected that productive rate of the company will be a little lower than the rates of the last year. 

Gold Lion Ltd, the former majority stockholder of KazakhGold, sold 6 million of its shares by the way of secondary distribution of its shares on London stock exchange (LSE). According to KazakhGold, Gold Lion placed about 11,9% of its shares at the $26,5 per piece worth $159 million. The deal passed at a lower limit of their expected price range: The Company was going to sell at the price from $26,5 to $27 per share from 11,9% to 15,8% of the authorized capital stock of KazakhGold. As a result of the placement Free float KazakhGold grew to 56%, Gold Lion Holdings preserved 44% of the shares. The book runner of the placement was JPMorgan Cazenove.

The JSC “Razvedka Dobycha KazMunayGaz”, the oil-mining “daughter” of the “KazMunayGaz” national company, signed the purchase agreement with CITIC Group about the purchase of the shares of CITIC Canada Petroleum (previous Nations Energy Company Ltd, the main asset of JSC “Karajanbasmunai”).

Askar Balzhanov, the General Director of JSC “Razvedka Dobycha KazMunayGaz” reported: “This purchase agreement has long been planned. According to the agreement “Razvedka Dobycha KazMunayGaz” completed the deal of the purchase of 50% of the shares from CITIC GROUP”.

The Financial Times reports that the financial subdivision of “Gazprom” could be the unknown investor that offered to buy the quarter of the shares of the company Imperial Energy. Imperial Energy, registered in Great Britain and owner of the assets in the Tomsk region of Russian Federation and in Kazakhstan, announced that the offer about the purchase of its shares of extra emissions, which can make up 25% of company’s increased authorized capital stock, was received from anonymous financial investor. The price per share offered by the investor is lower than its current average market cost.

“Samruk”, the holding that manages the state assets and the joint company “Russian aluminum” may come to an agreement about the joint ownership of the minefield “Bogatyr”.
The government of the republic intends to follow the policy of returning the major energy units under the control of state because Kazakhstan has the plans to construct several coal-fired power plants (for example, Balhash hydropower station). However, there is no need to invest in energy production if the state doesn’t control the relevant source of raw materials.

Earlier “Rusal” offered the government to construct Ekibastuz energy-metallurgic complex worth $2,5 billion on the base of the coal from Ekibastuz coal-field. The construction of the factory is expected to take 2,5 years. The productive power of the factory supposedly would make up 500 thousand tons. About 2,5 thousand people would work in the factory. The government of Kazakhstan has not yet made a decision about this project.

Since the November of 1996 “Bogatyr Akses Komir” Ltd, the branch of American company Access Industries Inc., owns the material complex of “Bogatyr”, the largest Kazakhstan’s coal section with planned production capacity of 50 million tons per year.

Besides, according to the agreement with RAO “EES Russia”, “Bogatyr Akses Komir” received the long lease of the section North, field N9 of the Bogatyr section and station “Molodezhnaya” belonging to the Russian side. The industrial reserves of Ekibastuz coal-field makes up about 10,4 billion tons.

Kazakhstani Corporation “Ordabasi” concluded the three agreements with Finnish Nokian Tires about constructing the factory in Kazakhstan which will produce the tires of premium-class.

According to the documents, the factory will be located in the industrial park of Astana and by the 2012 it will have reached the productive capacity of 4 million units. Financing of the project is realized at the expense of the personal funds of “Ordabasi” as well as the credit of “Kazini”. According to Dinmuhamet Idrisov, the Chairman of the board of management of corporation “Ordabasi”, almost all the production would be oriented to export. Adilhan Umerbaev, the Director of the tire subdivision of the Kazakhstan Corporation said that the company intends to develop petrochemical direction for the production of the raw-material for tire field.

According to the Exclusive’s source, not long ago the corporation “Ordabasi” has sold its branches — Aktyubin factory of the oil-gas equipment and the enterprise which manufactures ceramic tile “Asia Keramik”.

Anglo-Australian group “Rio Tinto”, one of the three largest mining companies of the world, completed its absorption of 79,4% of the shares of Alcan for $38,1 billion ($101 per share). The union of both of the companies gave a birth to the new world’s leader in mining the aluminium Rio Tinto Alcan. Up to now the largest manufacturer of this nonferrous metal has been the joint company “Russian aluminium” created by joining “Rusal”, “Sual” and aluminous assets of Swiss Glencore.

According to the materials in the site of Rio Tinto Alcan, the new company produces 4,3million tons of aluminium, 8,7 million tons of alumina and 30 million tons of bauxite.

The revenue of Rio Tinto Alcan (for 2006) makes up $49 billion, EBITDA — $16,5 billion, net debt — $46,3 billion. Last week Rio Tinto received permission of all the regulating authorities for the purchase of Alcan. The headquarters of the new company will be in Montreal, and Dick Evans, current executive director, will become the head of the company. Now the third largest manufacturer of the aluminium in the world is American Alcoa.

The Irish Celtic Resources, the company that JSC “Severstal” wants to absorb at the present time, buys the factory with power of 1,5 million tons of ore in a year from Anglo Asian Mining for $7,5 million. The factory will be used in the goldfield “Suzdal” in Kazakhstan. Celtic Resources Holdings forecasts the record manufacturing rates in 2007 and 2008 and still considers the offer of Russian company understated.

The offer of “Severstal” to acquire the shares of the company at the price of 2,7 pounds sterling essentially undervalues Celtic; therefore, the stockholders should reject this offer, which the board calls “voluntary hazardous offer”.

Earlier the Board of Directors of Celtic insistently recommended the stockholders to reject the offer of “Severstal” as it undervalues the company. But this Russian company reported that the Board of Directors of Celtic is not worried about the benefits of the stockholders, putting their own interests superior than the interests of the stockholders adding that Celtic has the sad history of destruction of the company’s stock value.

The JSC “Severstal” has begun the struggle for Celtic without the support of its Board of Directors. The JSC “Severstal” began its march for gold by buying the 22% of shares of Celtic for $54,4 million from Aton in the middle of August. After that Alexei Mordashev, the chief beneficiary and the general director of Russian metallurgic company, announced that it is only the beginning. Already at the beginning of September the Board of Directors of Celtic were suggested the terms of probable offer regarding purchase of the company for cash assets. The Irish Company concealed the name of nominator, but in the middle of the month, when it rejected their offer due to lower price (according to them) 2,2 pounds sterling per share, it announced that it was “Severstal”.

The British brewing company Scottish&Newcastle Plc (S&N) accused the Danish company Carlsberg of violating the agreement about the distribution of the shares in joint Russian enterprise Baltic Beverages Holding (BBH). Baltic Beverages Holding (BBH) is a joint-venture 50% of which belongs to the Danish Carlsberg and 50% to the British Scottish&Newcastle Plc (S&N). The company operates 18 breweries, of which 10 are located in Russia, 4 in the Baltic States, 3 in Ukraine and 1 in Kazakhstan. About 15 thousand people work in the units of BBH. Such trademarks as “Baltika”, “Yarpivo”, “Arsenalnoe”, “Nevskoe”, “Medovoe”, “Volga” in Russia, “Slavutich” and “Lvovskoe” in Ukraine, “Svyturys” and “Utenos” in Lithuania, “Aldaris” in Latvia, “Saku” in Estonia, “Irbis” in Kazakhstan are among the brands of the company.

It is said in the application that the Board of Directors sees the actions of Carlsberg as intention of voluntarily ending of the terms of the agreement, according to which Carlsberg is responsible to offer its share to BBH Scottish&Newcastle. The Board of Directors continues studying the question of what will be the right decision for the stockholders of S&N: the direct right of ownership to BBH or the entrance of new partner/partners to BBH.
 
The Carlsberg Group is one of the largest brewing companies in the world and owns such national brands as “Tuborg”, “Holsten”, “Baltika”. Carlsberg jointly on a par with its British partner Scottish&Newcastle owns the Baltic Beverages Holding, which operates in the seven markets of Eastern Europe: in Russia, Byelorussia, Kazakhstan, Ukraine and in Baltic States.

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