MOSCOW, April 25 (Reuters) - Russia's largest gold firm Polyus Gold may be close to pulling the trigger on a share sale to investors worth hundreds of millions of dollars as part of plans for a premium London stock market listing.
The company could announce plans for the move this week, one source said. But another source was more cautious, saying that Russia's extended May holiday break might slow the process.
Polyus declined comment. The firm had originally looked at selling a stake of 7.5-10.5 percent - worth up to $1 billion at its current valuation - but may scale back the sale due to choppy financial markets, a source familiar with the proposed transaction said.
Selling a smaller stake might delay Polyus's goal of inclusion in the FTSE-100 share index, but that source said this was not an immediate concern. "Let's get the right listing, and the indexation will happen in the next year or so," the source said.
A premium listing in London would put the company in a stronger position to take part in a wave of international mergers sweeping the metals and mining industry.
Polyus, worth about $10 billion and sitting on potentially lucrative gold reserves in Russia's far east, is talking privately to institutions to try and place the shares, the sources said, bu t may widen its marketing effort via a bookbuilding process.
The timing may be difficult given a retreat in the gold price from its year's high above $1,790 an ounce in February on fading hopes for further monetary easing by central banks.
Spot gold traded at $1,640 on Wednesday.
Polyus' share offering could sell at a discount to the current price, Renaissance Capital analyst Andrew Jones wrote in a research note earlier in April, adding it could prove an "excellent buying opportunity" as the stock has underperformed.The shares closed up 0.3 percent at $2.99 in London.
ACQUISITION CURRENCY
The company's oligarch co-owner Mikhail Prokhorov has said he wants to merge the company with an international player and a premium listing in London would create a more liquid acquisition currency for Polyus to pursue deals.
But Russian politics have complicated the long-awaited London move as well as Russian laws that treat the gold sector as strategic.
Polyus, in which billionaire Suleiman Kerimov is also a shareholder, had aimed to gain a FTSE 100 index spot by redomiciling from its Jersey home to London and selling stock to investors.
That move has not received the approval needed from a committee chaired by Prime Minister Vladimir Putin, who was re-elected to the presidency on March 4.
Earlier in March, Polyus withdrew its application to create a new parent company, considered necessary for it to relocate to London.
Redomiciling would have allowed Polyus to be eligible to join the FTSE 100 by raising its free float to 25 percent, rather than the 50 percent minimum needed for a Jersey company.
Currently traded in London via global depositary receipts (GDRs), Polyus would need to sell 10.5 percent of its shares to hit the 25 percent level and enable it to reduce its $500 million short-term debt, sources have said.
Polyus extended a $500-million credit facility with Societe Generale by three months in February, with an interest rate increasing to one-month LIBOR plus 2.25 percent.
Sources have said that a share launch was likely in the last week of April and would probably be in the form of a placement with strategic investors rather than a secondary public offering.
Polyus hired Bank of America Merrill Lynch, JP Morgan, VTB Capital, Renaissance Capital and SocGen for the planned listing and stock sale, the sources said.
reuters.com
The company could announce plans for the move this week, one source said. But another source was more cautious, saying that Russia's extended May holiday break might slow the process.
Polyus declined comment. The firm had originally looked at selling a stake of 7.5-10.5 percent - worth up to $1 billion at its current valuation - but may scale back the sale due to choppy financial markets, a source familiar with the proposed transaction said.
Selling a smaller stake might delay Polyus's goal of inclusion in the FTSE-100 share index, but that source said this was not an immediate concern. "Let's get the right listing, and the indexation will happen in the next year or so," the source said.
A premium listing in London would put the company in a stronger position to take part in a wave of international mergers sweeping the metals and mining industry.
Polyus, worth about $10 billion and sitting on potentially lucrative gold reserves in Russia's far east, is talking privately to institutions to try and place the shares, the sources said, bu t may widen its marketing effort via a bookbuilding process.
The timing may be difficult given a retreat in the gold price from its year's high above $1,790 an ounce in February on fading hopes for further monetary easing by central banks.
Spot gold traded at $1,640 on Wednesday.
Polyus' share offering could sell at a discount to the current price, Renaissance Capital analyst Andrew Jones wrote in a research note earlier in April, adding it could prove an "excellent buying opportunity" as the stock has underperformed.The shares closed up 0.3 percent at $2.99 in London.
ACQUISITION CURRENCY
The company's oligarch co-owner Mikhail Prokhorov has said he wants to merge the company with an international player and a premium listing in London would create a more liquid acquisition currency for Polyus to pursue deals.
But Russian politics have complicated the long-awaited London move as well as Russian laws that treat the gold sector as strategic.
Polyus, in which billionaire Suleiman Kerimov is also a shareholder, had aimed to gain a FTSE 100 index spot by redomiciling from its Jersey home to London and selling stock to investors.
That move has not received the approval needed from a committee chaired by Prime Minister Vladimir Putin, who was re-elected to the presidency on March 4.
Earlier in March, Polyus withdrew its application to create a new parent company, considered necessary for it to relocate to London.
Redomiciling would have allowed Polyus to be eligible to join the FTSE 100 by raising its free float to 25 percent, rather than the 50 percent minimum needed for a Jersey company.
Currently traded in London via global depositary receipts (GDRs), Polyus would need to sell 10.5 percent of its shares to hit the 25 percent level and enable it to reduce its $500 million short-term debt, sources have said.
Polyus extended a $500-million credit facility with Societe Generale by three months in February, with an interest rate increasing to one-month LIBOR plus 2.25 percent.
Sources have said that a share launch was likely in the last week of April and would probably be in the form of a placement with strategic investors rather than a secondary public offering.
Polyus hired Bank of America Merrill Lynch, JP Morgan, VTB Capital, Renaissance Capital and SocGen for the planned listing and stock sale, the sources said.
reuters.com
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