Supervisory Board of ALROSA dwelled on how to get ready for possible free float of stock

The Supervisory Board of ALROSA met on March 16 in Moscow for a session chaired by Ilya Yuzhanov, according to a press release received by Rough&Polished.
The Supervisory Board reviewed the preparations for a possible free float of ALROSA’s shares belonging to the Russian Federation and to the Republic of Sakha (Yakutia).
The Supervisory Board has decided to address the Government of the Russian Federation asking it to take into account the position of the Supervisory Board in favor of mandatory retention of the company’s controlling stake in state ownership (preserving 25%+1 share as the property of the Russian Federation and 25%+1 share as the property of the Republic of Sakha (Yakutia)), as well as to coordinate the preparation of privatization solutions for ALROSA with the Republic of Sakha (Yakutia), taking into consideration the following factors:
- ALROSA is a state budget contributor and a town-forming and socially significant enterprise for the Republic of Sakha (Yakutia), so the total exit of the Russian Federation from the authorized capital of ALROSA implies a risk of failed guarantees that ALROSA will continue its socially responsible policies;
- The total exit of the Russian Federation from the authorized capital of the company will require to buy back $1 billion worth of Eurobonds issued in 2010 for a period of up to 2020 from their holders, which will worsen the macroeconomic performance of ALROSA, including the pace and completeness of its investment program;
- Yakutia’s Law “On management and disposal of shares issued by ALROSA, which are a state property of the Republic of Sakha (Yakutia)” puts a restriction on reducing its stake in the share capital of the company meaning that Yakutia’s state authorities must ensure the retention of at least 25% plus one voting share of ALROSA in state ownership.
The Board approved the following options for a possible free float of ALROSA shares owned by the Russian Federation and the Republic of Sakha (Yakutia):
- Any free float of the company’s stock shall be based on mandatory retention of state control over the activities of ALROSA jointly undertaken by the Russian Federation and the Republic of Sakha (Yakutia).
- Any free float of 7 percent of ALROSA shares owned by the Russian Federation and 7 percent of ALROSA shares owned by the Republic of Sakha (Yakutia) shall be coordinated taking into account the activities involved and timing of such an action.
- A possible timeframe for the sale of shares to be floated shall be conditional to the availability and relevance of ALROSA’s reporting under IFRS for the first half of 2012 or for the whole year 2012.
The Supervisory Board has also approved the initial (maximum) amount of payment for auditing services within an open competition "For the right to contract for mandatory auditing of consolidated financial statements issued by ALROSA Group in accordance with International Financial Reporting Standards for 2012," the total being RUB 36 million, exclusive of VAT.
The Board members approved the "Regulation on the proceedings of internal control over financial and economic activity of ALROSA and the revised version of the "Regulations on the Audit Committee of the Supervisory Board of ALROSA."