Russia 090505 Basic Political Developments

GAZ Joins Bid for GM's Opel Unit

http://www.themoscowtimes.com/article/600/42/376800.htm
05 May 2009
By Nikolaus von Twickel, Nadia Popova / The Moscow Times
Car giant GAZ is taking part in a bid for GM's European operations, the German government said Monday.

GAZ is a partner in a takeover offer from Austrian-Canadian auto parts producer Magna for ailing GM's Opel unit, Felix Probst, a spokesman for the German Economics Ministry, said by telephone from Berlin.

Probst told The Moscow Times that Magna executives put forward a "rough concept" last week that is now being examined.

The ministry later refused to confirm reports that Sberbank was also part of Magna's consortium.

GAZ spokeswoman Natalya Anisimova declined to comment Monday, as did spokespeople for Magna and GM Russia.

GAZ, part of Oleg Deripaska's troubled business empire, earlier denied any interest in Opel. Deripaska owned a 20 percent stake in Magna until October, when he ceded it to pay off debt.

"Bidding for Opel is logical for GAZ, because it's looking for a new strategy after it failed to make the Volga Cyber model popular and filed for bankruptcy protection for van maker LDV," said Mikhail Ganelin, an analyst at Troika Dialog. "GAZ has no fresh ideas and no money to develop anything new."

GAZ announced April 29 that it had filed for bankruptcy protection for its British-based van maker LDV.

Magna's bid competes with Italian carmaker Fiat, whose CEO Sergio Marchionne held talks with German Economics Minister Karl-Theodor zu Guttenberg in Berlin on Monday. Guttenberg said after the meeting that Fiat's plan was "interesting" but needed a closer look. He told reporters that the Italians, who are also tying up with bankrupt U.S. carmaker Chrysler, calculated the price tag for Opel at 5 billion euros to 7 billion euros ($6.5 billion to $9 billion), German media reported.

Magna CEO Frank Stronach said last week that his company had enough money to buy Opel. "We have about $1.5 billion in cash in the bank, so we can easily make such a deal without putting ourselves at risk," he told the Austrian daily Kleine Zeitung.

A German regional economics minister said Monday that Sberbank was supplementing the Magna bid. "The Russian market and related opportunities to enter the Indian market through Asia are of course playing a role here," Juergen Reinholz, economy minister in the state of Thuringia, told Bloomberg.

The German newspaper Rheinische Post reported April 29 that Magna and its Russian partners were working together to secure a significant holding in Opel. The paper said Magna would own 19.1 percent of Opel, while Sberbank and GAZ would hold 31 percent.

"Cooperation with GAZ is good for Opel, because it could start the production of its cars in Nizhny Novgorod and thus expand to the markets of Russia and CIS countries," said Ganelin of Troika Dialog.

Economics Ministry spokesman Probst said there were more than five bidders for Opel so far and that Fiat and Magna were the most prominent of them. "The government has not determined a favorite," he said.

He said the German government was just checking the bidders' qualification for financial assistance like state loans. The decision on who gets GM's European division will be made by GM. "The [German] government has nothing to sell," Probst said.

Workers' representatives at Opel have voiced stiff opposition to selling the company to Fiat, arguing that the Italian group is more of a competitor than a savior and that it would be a Fiat rescue at Opel's expense.

The car workers' unions have a say in the process because GM's rescue plan for the European unit calls for workers to make $1.2 billion in concessions.

German analysts have echoed the unions' doubts and praised a deal with Magna and GAZ as a win-win situation, arguing that Magna would receive a big buyer for its components, while GAZ could get much-needed access to modern Western technologies.

Opel and GAZ do actually have a link -- a very ancient one in terms of carmaking. The legendary Pobeda ("Victory") sedan produced by GAZ after World War II was originally engineered on the basis of the Opel KapitКn, launched in 1939 and considered to be among the world's most modern cars at the outbreak of war.

VTB May Offer to Buy Back Shares at IPO Price, Kommersant Says

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auvtd9Cc2Gc8

By Denis Maternovsky

May 5 (Bloomberg) -- VTB Group, Russia’s second biggest lender, may offer to buy back shares at the price they were sold at during the initial public offering, Kommersant said.

The bank is considering allowing minority shareholders to buy back as much as 300,000 rubles ($9,135) of shares for 13.6 kopeks each, the Russian newspaper reported, citing an unidentified person familiar with the plan.

VTB raised $8 billion in its 2007 IPO, the world’s biggest that year. The bank’s shares have declined 76 percent since then to close at 3.29 kopeks on May 5.

To contact the reporter on this story: Denis Maternovsky in Moscow at [e-mail]

Last Updated: May 5, 2009 01:44 EDT
VTB: A gift to minorities in the offing

http://www.businessneweurope.eu/dispatch_text8531

UralSib, Russia

May 5, 2009

Some kind of buy-back. According to Kommersant this morning VTB (VTBR - Hold) is set to discuss a scheme to support private minorities which have suffered from a 76% drop in the share price since the IPO in May 2007. Around 120,000 private investors took part in the IPO and acquired shares at 13.6 kopeks ($10.55/GDR), now the shares are trading at 3.3 kopeks. Reportedly the bank plans to buy-back minority shares at the IPO price with a cap of RUB300,000 for each individual investor. However no precise details have been released and the proposal will be discussed by the bank's supervisory board in May. Also uncertainty prevails as to whether the bank intends to buy back shares from existing private shareholders or only those which took part in the placement.

Still no reason to be inspired. It is quite difficult to estimate just how much VTB could spend on such a buy-back. In addition there no precedents in which a buy-back was carried out at a price substantially higher than the current market price. While such a move could be beneficial from an image standpoint, from a financial perspective it cannot be regarded as positive in the current market situation.

NPLs is the bigger problem. We still do not see any substantial drivers for the stock and believe recent rises have been driven by reigning optimistic on global markets. The level of VTB's NPLs is the crucial thing right now and we estimate that they will total 9% of total loans by the end of the year which could lead to substantial losses for the bank. The details of a secondary share placement will be discussed in May and it is scheduled to take place in 3Q09. In the absence of detailed information we believe that currently it creates additional risks. We have a HOLD recommendation for VTB and a target price of $1.2/GDR.

Leonid Slipchenko