ALROSA is getting ready for an IPO, planning a widest possible public sale of shares, according to Prime, a news agency specialized in business information. If the decision to float 14% of the company will be taken before June 25 this year, the placement will be carried out in October-November, Fyodor Andreev, CEO of the diamond mining giant, told reporters after the meeting with Russian President Vladimir Putin.
Andreev also noted that the company's financial performance in 2013 will virtually not change, and the situation will depend on how ALROSA will handle its non-core assets.
In April, the company sold its 51% interest in OAO Timir, an iron ore mining and metallurgical works, to Evraz, and by the end of this year it intends to close the deal to sell natural gas assets for $1.15 billion.
SALE OF SHARES
The final decision on the sale of a 14% stake in ALROSA (the Russian Federation and Yakutia are to sell 7% from each of their respective shareholdings) must be made by the government until June 25.
Floating 14% of ALROSA on the Moscow Stock Exchange appears to be the major alternative for privatization as the company is not interested in attracting a strategic investor. "We want a widest possible public sale to avoid a major strategic investor who could upset the balance of power between the two major shareholders - the Russian Federation and Yakutia (now holding 50.9% and 32% in the company – editor’s note),” the head of ALROSA said.
According to him, the Russian government has not yet made the final decision on privatization – there are no prepared legal documents. "According to our schedule discussed two days ago with the Federal Property Management Agency, we have to wrap it up (getting approvals for the documentation and taking the final decision - editor’s note) before June 25, if we really want to complete the deal this year and get to close work with investors. Otherwise, if the decision will be made in August or September, the deal will be rather muddled, and we shall have no possibility for profound work with investors,” Andreev said.
Responding to a question about how much ALROSA plans to gain from the deal, Andreev said: "Today, the company is valued at about $ 8 billion, and we’ll see if we can raise what we are planning, since it is of fundamental importance to be placed on the stock exchange to understand the real value of the company, whose estimates today range from $ 9 to $ 15 billion on the whole.”
Andreev also added that he had no preliminary estimates. Earlier, the Federal Property Management Agency estimated the deal at $ 1 billion. "These are assessments of a balance sheet nature," Andreev said.
FINANCES NOT CHANGED
For 2013, ALROSA predicts that revenues will stay at the level of the previous year reaching $ 4.5 billion, while the company’s net profit will be $ 1 billion.
"In 2011, 2012 and 2013, we made a point of having no significant changes. We expect that our revenue will also be at the level of $ 4.5 billion and profit at the level of $ 1 billion," ALROSA’s CEO said.
However, he noted that the situation will also depend on how efficiently the company will deal with its non-core assets. He recalled the recent sale of ALROSA’s iron ore asset to Evraz Group.
Earlier, during the meeting with President Putin Andreev said that in 2012 the company's revenue reached $ 4.5 billion, so the company has become a leader in the market. Its net profit exceeded $ 1 billion. The company demonstrated good performance in terms of cost-effectiveness in 2012. Thus, its operating margin in 2012 reached 18% and its net profit margin - 27%. ALROSA spent about RUB 8 billion for dividends.
GAS ASSETS
ALROSA plans to sell natural gas assets earning $1.15 billion until the end of the year. The head of the company did not name potential buyers, noting that ALROSA is considering several bidders.
"I cannot say it, as we signed non-disclosure agreements with everyone of them. I can only say that we have more than one buyer and the mood is rather competitive,” he said. According to Andreev, it is more likely that in the end there will be one buyer, not a group of investors.
Earlier, LUKOIL was mentioned among the contenders for the gas assets held by ALROSA. Geotransgaz was bought by ALROSA Group in 2006, along with Urengoyskaya Gazovaya Kompania. According to DeGolyer & McNaughton, total reserves in their license areas in the Yamal-Nenets Autonomous District now make up 187 billion cubic meters of gas and 26.4 million tons of condensate. The auditor admitted the assets to be fairly promising - according to DeGolyer & McNaughton’s estimate, they will be able to provide up to 6 billion cubic meters of gas and 1.2 million tons of condensate at the peak of production.
Geotransgaz owns a license to develop some part of the Beregovoye Gas Field, including the South Geological Survey Area. Its reserves reach 107 billion cubic meters of gas and 17 million tons of condensate. Urengoyskaya Gazovaya Kompania owns a license for exploration of the Ust-Yamsoveyskoye Field. Its reserves reach 94 billion cubic meters of gas and 10 million tons of condensate. However, the field requires further exploration.
In December, Geotransgaz started independent sales of gas from the Valanzhinsky Area of the Beregovoye Gas Field (also located in the Yamal-Nenets Autonomous District) through the gas transportation system of Gazprom. Geotransgaz signed an agreement for gas supplies until 2015 with Rosneft on November 20. Under this three-year agreement Geotransgaz will supply about 7 billion cubic meters of natural gas.
