Second issue

**Topics of the day**

Central newspapers talk about how the 62nd anniversary of the Victory was celebrated in Russia and the world . The press notes that Victory Day in Moscow was marked by two traditional events: a parade took place on Red Square, and a five-thousand-strong communist march took place on Tverskaya. As for innovations, the parade was hosted for the first time by Defense Minister A. Serdyukov, and the festive speech of Russian President V. Putin, according to Kommersant

", the tone resembled a note of protest. Having received a short report from the Minister of Defense, the President congratulated those gathered and all Russians on Victory Day. He did not ignore the political topic: "Those who desecrate monuments to war heroes insult their own people, sow discord and new distrust between states and people. We have no right to forget that the causes of any war must first of all be sought in the mistakes and miscalculations of peacetime. And their roots are in the ideology of confrontation and extremism." As for the communists, they practically abandoned revolutionary rhetoric and focused on the problem of demolishing monuments in Eastern Europe.

As for the economic sphere, part of the central press is commenting on the official visit of President V. Putin to Kazakhstan and Turkmenistan, which began yesterday . The Minister of Industry and Energy of the Russian Federation, V. Khristenko, who arrived the day before, has already met with top officials of Kazakhstan and confirmed that V. Putin’s visit will be of particular importance in the field of energy.
Vedomosti reports that a source in the Russian government confirms that Moscow is completely uninterested in discussing a pipeline that bypasses Russian territory and the Russian delegation will insist on an alternative project. If Russia manages to convince Turkmenistan to implement the Caspian project, this will mean a geopolitical rapprochement between the two countries and Ashgabat will certainly receive political and economic guarantees from Moscow, experts say. In addition, they believe that Moscow can promise technical assistance in the construction and modernization of oil and gas pipelines and fields. Continuing the topic, Vedomosti writes that simultaneously with the Russian-Kazakh-Turkmen negotiations, an energy summit is being held in Warsaw on May 10-12, the main topic of which will be the import of oil and gas from the south-eastern zone, including from Kazakhstan and Azerbaijan through Ukraine to Poland and further towards Germany. However, the leaders of the Central Asian republics will not be at this meeting - N. Nazarbayev, whom Polish leader L. Kaczynski personally invited back in March, refused to participate.
As Kommersant notes , on the eve of the opening of an “anti-Russian” energy summit in Poland, dedicated to the search for alternative Russian sources of oil and gas, Moscow launched a decisive counterattack. It was headed by President V. Putin. The first success is that one of the main participants, N. Nazarbayev, will be absent from the summit, with whom the Russian president will be visiting throughout the days of the Polish summit. The ultimate goal of the Russian President's unprecedented tour of Central Asia is to prevent the construction of trans-Caspian pipelines bypassing Russia.

**President of the Russian Federation and his administration**

Meeting of President V. Putin with three high-ranking members of the International Olympic Committee (Kommersant)

Kommersant talks about a number of meetings that Russian President V. Putin held on Monday, including with three high-ranking members of the International Olympic Committee (IOC): with the President of the Association of International Winter Sports R. Fasel, with the President of the European Olympic Committee P. Hickey and with the President of the National Olympic Committees of Africa L. Palenfo. At the same time, as Kommersant notes, “Russian sports honor” at this meeting was “defended” by the head of Rossport V. Fetisov, the president of the National Olympic Committee L. Tyagachev and the head of the Interros company V. Potanin, who, as is known, methodically builds sports facilities Krasnaya Polyana. Moreover, if the first two requests for this meeting looked impeccable from the point of view of the protocol, the third left no doubt that in fact the IOC members were invited for a “sacred cause” - to discuss the prospects of Sochi at the 2014 Winter Olympics, the publication emphasizes. However, V. Putin pretended that this was not the case at all: in particular, he asked R. Fasel about how preparations were going for the 100th anniversary of hockey in the world, and persistently offered all possible assistance in organizing the celebrations. Meanwhile, Kommersant explains the course of this conversation as follows: “...No one is offering anyone anything illegal. It’s just that Russia, as a 100% hockey power, can, of course, take on part of the burden of expenses in this labor-intensive matter. And no one ever does anything will not ask in return. God forbid. It’s just that maybe those who accepted a helping hand have an elementary feeling of gratitude, which will make itself felt at the right moment.”

**Federal Assembly**

The “residence qualification” for members of the upper house of parliament, which was introduced to the State Duma by the Speaker of the Federation Council S. Mironov, threatens senatorial seats (Novaya Gazeta)

"Novaya Gazeta", referring to the bill providing for a "residence qualification" for members of the upper house of parliament, which was introduced to the State Duma by the Speaker of the Federation Council S. Mironov, notes that for now the bill, which undoubtedly has not a technical, but a political significance, lies somewhere then in the desktop of State Duma Chairman B. Gryzlov. According to the newspaper, the document has not yet been sent out for discussion. The Duma committee responsible for passing the bill has not even been appointed. This is quite understandable: many senators (more than a hundred of them are members of the United Russia party) do not agree with the division into “local” and “non-local”. Thus, the senator from Ingushetia V. Likhachev considers Mironov’s qualification unconstitutional, and the senator from the Evenki Autonomous Okrug Yu. Sharandin - it destroys the equality of rights of citizens. Representative of Taimyr L. Roketsky, senator from the Pskov region M. Margelov and from the Kostroma region A. Ter-Avanesov also spoke out against the ten-year residency requirement.
In addition, as the newspaper notes, the reason for the delay may be that the introduction of a residency requirement for senators may “pull up” the question of the possible introduction of similar restrictions for candidates for State Duma deputies. However, since the bill received public approval from the president, there is reason to believe that it will be adopted before the end of the work of the State Duma of the fourth convocation.

**Public Chamber**

Vladimir Putin’s meeting with the leadership of the Public Chamber is tentatively scheduled for the end of May (Vedomosti)

Vedomosti, citing a source in the presidential administration of the Russian Federation, writes that V. Putin’s meeting with members of the council - the governing body of the Public Chamber (PC) - is tentatively scheduled for the end of May. The agenda of the meeting has not yet been determined, but perhaps we will talk about rotation of members of the OP. According to a source in the OP, the Kremlin has not yet decided who will be included in this list, while many would like to stay. Council members interviewed by Vedomosti believe that personnel issues are within the competence of the president - as he says, so they will do. But another source is confident that out of 42 people, the president will replace only a few. Representatives such as L. Bockeria, E. Velikhov, A. Kucherena, V. Glazychev, A. Ochirova, L. Roshal, I. Rodnina will probably remain. And among the new people who may appear on the list, another source in the OP names film director N. Mikhalkov. As a high-ranking public figure believes, the “screamers”, the most active troublemakers, will be “removed” from the OP. However, he did not name names, explaining only that, for example, A. Kucherena is not one of these - although he was noted for his loud speeches against hazing and in defense of defrauded shareholders, he always acted in line with the authorities. Other members of the chamber do not rule out the departure of social activists who do not attend meetings, for example, singer A. Pugacheva or businessman M. Friedman. In addition to rotation, social activists want to convey their proposals to the president at the meeting. “My colleagues and I decided that we need to assess the country’s policies and ideology as a whole, and notice what has been missed,” said V. Zakharov, chairman of the commission on environmental safety.
In general, according to political scientist D. Badovsky, the “Public Chamber” project has taken place, the Kremlin is pleased with its work - it correctly responds to acute situations: Butovo, “dissent marches”, hazing, the Estonian problem, acts as a showcase for civil society and helps control NGOs. So there will be no major changes in the composition of the “presidential quota” - the rotation will most likely be spot-on, and the powers of social activists will be symbolically expanded as an incentive, the expert believes.

**Regional news**

According to the manager of the affairs of the President of the Russian Federation V. Kozhin, Sochi has a good chance of becoming the Olympic capital in 2014 (interview with Arguments and Facts)

The weekly "Arguments and Facts" publishes an extensive interview with V. Kozhin, Administrative Officer of the President of the Russian Federation, who spoke about the activities of his Office. In particular, answering the question what, in his opinion, are the chances of Sochi becoming the Olympic capital in 2014, V. Kozhin noted that he was in Sochi when members of the IOC commission came there. According to him, these people are “very reserved. However, it seemed to me that Sochi made a huge impression on them. Perhaps this is the only place in the world where, having descended from a snowy slope, in 40 minutes you can find yourself among palm trees on the hot seashore.” . So Russia has good chances, V. Kozhin emphasized.

**Politics News**

"Arguments and Facts", discussing which path Russia is taking after Boris Yeltsin's departure, cites an excerpt from a letter to the newspaper, which is a kind of response to V. Potanin's statement about the fact that a person becomes poor from laziness

The weekly "Arguments and Facts", discussing the path Russia is taking after the departure of Boris Yeltsin, in particular, notes that sociological surveys conducted immediately after his funeral only confirmed the negative attitude of the majority of Russians towards the leader, who for several years he was the idol of democratic Russia and the darling of the West. Of all the rulers of Russia over the past 100 years, starting with Nicholas II, Boris Yeltsin received the worst assessment. At the same time, about 70% of Russians believe that V. Putin is leading the country “rather in the right direction.” However, behind this “sooner in the right” lies increasingly insistent demands for course correction. Thus, there remains blatant injustice in the distribution of income and wealth of the country. At the same time, we are not talking about making the poor rich, and settling the homeless in the mansions of the oligarchs, turning them into communal apartments. The drama of the current social situation lies in the fact that it is the working, active part of the population that is not able to provide themselves with decent living conditions (the opportunity to build a house or buy an apartment, educate children, have access to culture, healthy food, medicine).
To develop the topic, the weekly "Arguments and Facts" provides an excerpt from a letter to a newspaper from one of the villages in the Perm Territory. As AiF notes, this is a kind of response to V. Potanin’s sensational statement that a person becomes poor out of laziness. “For some reason, my neighbor Ivan is not getting rich,” the author of the letter, Zinaida Poturaeva, objects to the oligarch. “Ivan’s wife is a teacher with more than 20 years of experience. And Ivan himself works in an agricultural company as a tractor driver. And, in addition, the family raises three heads of bulls a year , keeps two cows and five piglets. And they also grow cucumbers for sale. From all the income, Ivan finally bought a beat-up Zhiguli and an old tractor for 90 thousand rubles. The whole family works all year round, tirelessly. Of course, they don’t go naked and They don’t go hungry. But there’s nothing to go on vacation. But three children are growing up..."

**Scandals and incidents. Gossip**

The scandal surrounding V. Vekselberg's purchase of the Sulzer company led to resignations at the largest Swiss bank (Gazeta).

"Gazeta" talks about the scandal associated with V. Vekselberg's purchase of large blocks of shares in the Swiss company Sulzer. The head of the Zurcher Kantonalbank, the largest cantonal bank in Zurich, H. Wegeli and the head of the bank's stock market division M. Hoffman intend to resign. According to the British Financial Times, H. Wegeli admitted that the bank's internal rules were violated when dealing with securities of the Swiss company Sulzer. Both leaders paid with their posts as a result of the support that the bank provided to V. Vekselberg and the structures he controlled when purchasing large blocks of shares in the Swiss company Sulzer.
At the end of April, the Austrian company Everest Beteiligungs, one of the beneficial owners of which is V. Vekselberg, announced that it owns 17.51% of voting shares, as well as a package of options to purchase another 14.4%. Local mergers and acquisitions legislation requires disclosure of the acquisition of more than 5% of the shares of a publicly traded Swiss company. But this was not done when purchasing Sulzer. Renova's intermediaries, two Austrian companies, managed to buy up 31.92% of Sulzer's stake thanks to various derivative schemes. The Zurcher Kantonalbank helped them do this.
Arguing about why Renova needed to establish control over Sulzer, which produces pumps for oil and gas pipelines, the newspaper believes that the Russian Transneft plans to use such equipment for installation on the ESPO pipeline under construction, which will bring Siberian oil to the Pacific coast. At the same time, the publication notes, in contrast to V. Vekselberg’s previous charitable actions, such an acquisition as a stake in Sulzer can help generate tangible profits. For example, thanks to orders from Transneft, which is headed by Vekselberg’s good friend S. Vainshtok.

**Resignations and appointments**

According to Vedomosti, O. Vyugin may leave the post of head of the Federal Financial Markets Service in May. His successor may be V. Milovidov, assistant to the prime minister, who in 2000-2003. was the first deputy chairman of the FCSM, the predecessor of the FSFM

As Vedomosti learned, the head of the Federal Service for Financial Markets (FSFM) O. Vyugin may leave his post in May. According to the newspaper's sources, V. Milovidov may become the new head of the service. After his resignation, O. Vyugin may work at Goldman Sachs, say sources close to the management of the Federal Financial Markets Service.
O. Vyugin called his main task at the head of the FSFM the return of the stock market to Russia. He coped with it - now about 70% of transactions with Russian securities are concluded within the country. General Director of UBS Securities M. Manasov sees Vyugin’s merit in the fact that our stock market can now be compared with Western ones in terms of transparency and civility. Vyugin’s departure would have been a tragedy, M. Manasov laments, he turned out to be a godsend for the FFMS - a professional and a decent person. The appointment of V. Milovidov, who was well known to them, could have softened the bitterness of the loss for the brokers. He was in 2000-2003. was the first deputy chairman of the Federal Securities Commission, overseeing collective investments and infrastructure. After leaving the FCSM, he headed the department of financial markets of the government apparatus, and in April 2004 he became M. Fradkov’s assistant.
According to the managing partner of the Liniya Prava company, D. Glazunov, who previously worked with V. Milovidov at the FCSM, he and O. Vyugin have similar views on the market, so the policy of the FFMS will not change, which cannot be said about the team.

**Economic News**

Three-month nickel contracts on the London Stock Exchange yesterday rose to a historical high of $51.8 thousand per ton, but then collapsed to $49.2 thousand (“Business & FM”)

"Business & FM" publishes analytical material on the situation on the non-ferrous metals market. As the newspaper reports, three-month nickel contracts on the LME yesterday rose to a historical high of $51.8 thousand per ton, but then collapsed to $49.2 thousand. In the medium term, analysts expect a price correction of about 40%. Only after prices fall will investors again have a reason to buy this metal. Yesterday's fall was spurred by another statement from the largest stainless steel companies. Talk about the possible replacement of increasingly expensive nickel with other metals in the production of stainless steel is becoming increasingly persistent. It seems, the newspaper believes, that the process will indeed develop, although a complete replacement of the technology in a few months or even a couple of years is unlikely to be expected. In the short term, the price of the metal depends more on worker strikes and the flood situation in Dudinka, which affect nickel reserves in company warehouses.
Regarding the situation with gold prices, the publication, in particular, notes that it, having gone up from an indecent level of $670 per troy ounce in modern times, did not find a reason to move further and hovered in the range of $680-690 per ounce.

Russian power engineering manufacturers are ready to increase the output of energy products, but there is no clear signal from those who could provide the industry development program ("Expert")

The "expert", commenting on the latest message from Russian President V. Putin to the Federal Assembly, in particular, draws attention to the fact that in it the head of state no longer spoke, as a year ago, about hydrogen and thermonuclear energy - completely distant technological projects. They talked about plans for the next 15 years in traditional generation: thermal, hydro and nuclear energy. It is planned that the energy sector will be based on more modern technologies, therefore, with an expected increase in electricity consumption by two-thirds, generating capacity will have to be increased by only one and a half times - from about 220 GW, which we have now, to 340 in 2020. New technologies should also contribute to serious a shift from the current structure of electricity generation with a predominant share of gas towards an increase in the shares of nuclear, hydro and coal generation. Thus, the share of gas in the balance of the electric power industry should decrease from 43% to 39% in 2020. This will happen, among other things, by increasing the efficiency of gas stations from the current 30-35% to 50-55%. The number of hydro, coal and nuclear power plants will increase.
According to the magazine, it is not difficult to agree with promising areas, but concern is caused by the next 5-7 years, during which plans for commissioning capacities will most likely be disrupted. As one of the main reasons for this, the weekly identifies the declared volumes of input, which cannot be supported by the domestic mechanical engineering industry. “Our power engineering manufacturers,” the publication writes, “are ready to increase the output of energy products, the same Power Machines plans to increase output to 17 GW of capacity per year, but there is no clear signal from those who could provide the industry development program. Same problems "EMAlliance", the largest manufacturer of boiler equipment in the country. The companies are ready to finance development programs on their own, but there is no obvious increase in orders to ensure this financing from the power industry. Moreover, our machine builders, due to the fact that they have been engaged in the modernization of the Soviet energy industry for the last decade and had very few orders for new equipment, we really lagged behind in a number of technologies, for example super-supercritical (for coal-fired power), we still don’t have a turbine, and we don’t even have a boiler designed for such operating parameters.”

Research by the marketing agency GfK Rus "IMDS - Russian Insurance Market" (RBC daily)

"RBC daily" talks about the results of a study by the marketing agency GfK Rus "IMDS - Russian Insurance Services Market", which was conducted in March of this year in 176 settlements of the Russian Federation in seven federal districts. A total of 2,207 respondents were interviewed at their place of residence. During the study, the question was asked: “Which of the following insurance companies have you seen, heard or read advertisements lately?” The Top 10 companies selected by respondents included Rosgosstrakh (43%), ROSNO (32%), Ingosstrakh (26%), Spasskie Vorota (21%), AlfaStrakhovanie (14%), " UralSib (10%), NASTA (7%), RESO-Garantiya (7%), Soglasie (6%) and MAX (4%). At the same time, 21% of respondents answered that they were unfamiliar with insurers’ advertising, and another 10% of respondents found it difficult to answer. As GfK Rus senior consultant P. Zalessky explained, this indicator allows us to evaluate the effectiveness of advertising campaigns. Compared to last fall, Soglasie managed to increase the awareness of its advertising by 3%. AlfaStrakhovanie, RESO-Garantiya, MAX, UralSib and NASTA were able to increase this figure by 2% each. The military insurance company increased its advertising awareness by 1%, and Renaissance Insurance, which was not included in the TOP 10 in terms of awareness, lost 2% in this rating over the past six months, and Rosgosstrakh - 1%.
Marketing Director of AlfaStrakhovanie T. Puchkova believes that “if we take the market as a whole, then GfK Rus’ assessment is correct.” “But if you look at cities with a population of over a million, where the bulk of premiums are collected and the business of insurers is concentrated, then the picture will be better for AlfaStrakhovanie and ROSNO,” she noted. “At the same time, ROSNO’s gap from Rosgosstrakh will be minimal, and we occupy 4th place with a share of 50%."

The situation on the Russian cinema market (RBC daily)

RBC daily publishes material that analyzes the situation on the Russian cinema market. As it turned out, the rapid growth of the Moscow cinema market forced domestic cinema chains to expand their geography and go to cities with a population of over a million, but even in these cities the market is close to saturation. Going to Kazan, Yekaterinburg, Novosibirsk, Chelyabinsk and Samara is no longer profitable, market participants emphasize. They attribute the reason for the rapid growth of the regional market to the strengthening of the positions of local chains. According to Nevafilm Research, at the beginning of 2007, Kazan ranks first in the number of cinema halls in the ranking of cities with a population of over a million: 3.95 cinema halls per 100 thousand inhabitants. After it comes Moscow with 2.77 cinema halls, St. Petersburg - 2.53, Yekaterinburg - 2.45, Novosibirsk - 2.29, Chelyabinsk - 2.1. In further development of the topic, with reference to Nevafilm Research, the newspaper published a rating of “Russian cinema chain operators in the regions (outside the Moscow region and St. Petersburg, data as of December 31, 2006).” The leaders are Kinomax, Karo Film and Art Science Cinema.
Meanwhile, now the largest local operators, according to Nevafilm, are Novosibirsk's Art Science Cinema (8 cinemas, 25 halls), Yekaterinburg's Premier Hall (15 cinemas, 21 halls), Krasnodar's Monitor (8 cinemas, 21 halls) and Kazan Suvar (3 cinemas, 13 halls). As, in particular, the art director of the Art Science Cinema Distribution network D. Kim believes, another 50-60 cinema halls are needed to saturate the Novosibirsk market. “We are going to open half, and half will be opened by federal networks, which, however, are not yet present in our market. But Cinema Park and KARO Film have already announced plans to open,” said D. Kim. He also noted that “Art Science Cinema Distribution” is actively fighting for its share in the Siberian market: “In addition to Novosibirsk, we are present in Berdsk, Kemerovo, Gorno-Altaisk. In the next two years we plan to expand to Barnaul, Tomsk, Biysk, and Iskitim."

**Company news**

In the near future, OGK-1 will re-issue its shares, which will give it the opportunity to exit trading outside the list on the RTS and in the future conduct a full placement of the company's shares on the Russian or London stock exchanges (Kommersant).

As Kommersant learned, in the near future OJSC First Generating Company of the Wholesale Electricity Market (OGK-1) will reissue its shares, which will give it the opportunity to exit trading outside the list on the RTS and qualify for inclusion in the “I” list. The latter, in turn, will allow the main shareholder of OGK-1 - RAO UES - without a forced reduction of its share in accordance with the requirements of the Federal Financial Markets Service in the future to carry out a full placement of the company's shares on the Russian or London stock exchanges. According to a publication source close to OGK-1, in the next two weeks the company intends to complete the reissue of its shares with a reduced par value. This was necessary in connection with the reduction of the authorized capital of OGK-1. The newspaper's source explained that based on the results of the second financial year since the creation of OGK-1, the value of its net assets turned out to be less than the size of the authorized capital. According to the source, this happened due to the tariff imbalance and the large number of losses that the company received along with the newly attached power plants.
In connection with the issue of new shares, OGK-1 shares currently listed outside the RTS list will be cancelled. This will remove one of the significant problems of OGK-1, which is preparing to place 19.7% of its shares of the increased authorized capital on the market in the fall. The fact is, reminds Kommersant, that RAO UES owns 91.6% of the shares of the generating company, and it cannot be admitted to listing. Now OGK-1 will have the opportunity to undergo this procedure. However, industry analysts disagree about whether Russian energy companies need a listing in principle. Thus, analyst of AK Bars Finance Investment Company V. Rozhankovsky is confident that the listing increases the value of the company. In turn, Antanta Capital analyst D. Terekhov is not at all sure that the listing is significant for the subsidiaries of RAO UES. “Strategists are buying energy assets from us, and they are ready to pay a high price in any case,” he explained, expressing, at the same time, confidence that the issue of new shares will give OGK-1 the opportunity to still be included in the listed auction.

The board of directors of OJSC OGK-Z, re-elected at the annual meeting of shareholders, included eight new representatives out of 11 people, the majority from Norilsk Nickel (RBC daily)

RBC daily briefly reports that the board of directors of OJSC OGK-Z, re-elected at the annual meeting of shareholders, included eight new representatives from 11 people, the majority from MMC Norilsk Nickel, which recently became the owner of 46.6% of the shares companies. The new shareholder is represented on the board of directors by seven people. The board was also replenished with the recently appointed CEO of OGK-Z I. Blagodyr and the managing director of Halcyon Advisors D. Hern. The head of the RAO UES department, A. Gabov, the executive director of business unit No. 1 of RAO UES, A. Panina, and the executive director of Interros Holding Company, A. Klekovkin, retained their positions.

Fortum became the first contender to participate in the additional issue of shares of TGK-1. The Finnish company wants to retain a blocking stake in TGK, which it has been collecting for several years. It will have to spend at least $650 million on this, experts estimate (Vedomosti, Business & FM).

Vedomosti reports that TGK-1 shareholders voted for an additional issue of shares, which the company plans to issue this year by public subscription, TGK reported. A total of 1.875 billion new shares will be issued, almost 65% of the current and 39% of the increased authorized capital. TGK-1 is going to sell additional shares for $1.2 billion and use the money to finance a large-scale investment program.
The method of selling the securities will be determined in June, a source close to TGK-1 told Vedomosti. In addition to placement on the Russian stock market, TGK can convert part of the new shares into GDR, he argues. The receipts may be offered to US investors and may also be listed on the London Stock Exchange. Since the shares will be placed by public subscription, RAO UES expects that the issue will be of interest to a large number of large investors - both Russian and foreign, adds M. Nagoga, a representative of the energy holding.
Meanwhile, the first contender for the new TGK securities has already appeared - Fortum has decided to participate in the issue. As the vice-president of the Finnish company K. Kautinen said, Fortum wants to buy such a number of shares that will allow it to retain a blocking stake in TGK-1.
According to a source close to RAO UES, the company does not plan to buy out new shares in TGK. This means that the energy holding’s share in TGK will be reduced to 33.9%. It has not yet been possible to contact Interros representatives.
Fortum would be happy to increase its stake in TGK-1 to a controlling stake, but recently the management of RAO made it clear to the Finnish company that it would not be able to gain control over the strategic assets supplying St. Petersburg, recalls Aton analyst D. Skryabin. To maintain its share, Fortum will have to spend about $658 million, he calculated.
Continuing the topic, the Business & FM newspaper notes that at the beginning of the week, information was received from RAO UES that the concern would definitely not receive a controlling stake following the results of the additional issue of TGK-1. Analysts also doubt the Finns’ ability to retain the blocking stake. “Most likely, the same Gazprom will not allow Fortum to retain its stake in the company. Norilsk Nickel could also become a possible contender for the purchase of the additional share issue,” says Alfa Bank analyst A. Kornilov. “There will be great interest in the auction, since the company owns approximately half of the energy resources of North-West Russia,” adds Aton Investment Company analyst D. Skryabin. But the fight for TGK-1 will not greatly affect the price of shares. “At current market prices, the company is valued quite fairly - $689 per 1 kW EV/ IC, which leaves upside potential of approximately 10-11%. Most likely, the strategic investor will pay this premium during the additional issue. Our target price for TGK-1 is $0.00157, our recommendation is to hold,” says Antanta Capital analyst D. Terekhov.

TGK-1 may become an enterprise with the largest number of foreign investors among the subsidiaries of RAO UES (RBC daily)

RBC daily does not rule out that TGK-1 may become an enterprise with the largest number of foreign investors among the subsidiaries of RAO UES. The fact is that it has applied for listing on the London Stock Exchange (LSE). However, placement on the LSE does not depend only on the desire of company management. According to the rules of the exchange, a company must have financial statements in accordance with IFRS for at least three years, and this is an obstacle for Russian generating companies, since in most cases they completed their formation about a year ago. In March it became known that RAO UES sent a request to the LSE with a request to grant a deferment to some of the holding companies that planned to float in London this year to provide three years of audited statements. In fact, the company’s chances of entering European markets depend on this decision.
According to a source at TGK-1, the company intends to raise $1.3 billion during the IPO, although he did not specify how much of the additional issue could be placed in London. The company noted that in the near future, the IFRS reporting, which is so important for placement on the LSE, will be ready - pro forma for 2005 and audited for 2006 and the first quarter of 2007. During the placement in July, RAO UES plans to sell 64% in TGC-1. The company's largest minority shareholder, owning a blocking stake, the Finnish concern Fortum intends to retain its share during the additional issue. Senior analyst at Alfa Bank A. Kornilov recalled that LSE is sympathetic to the difficulties of Russian energy companies and is generally considering the possibility of easing requirements as an exception. “If this information is correct, the chances of OGKs and TGCs to locate in London become significantly higher,” he said. According to A. Kornilov, placement in London will attract much more foreign investors during the IPO. According to E. Dubovitskaya, Deputy General Director of the Corporate Governance Technologies company, London is a good platform for attracting large volumes of investment, but in relation to TGK-1 LSE it should be viewed more as an option rather than a prerequisite for a successful placement. “There will be buyers in Russia for such a promising asset, especially given the interest from Gazprom,” she added. “It makes sense to go to London only if there are no restrictions on the purchase of shares by non-residents,” says VTB-24 analyst S. Kleshchev However, he does not rule out that the motivation may be completely different: to demonstrate to Western buyers that domestic investors are willing to pay more for control in the company than any foreigner, and thereby legalize the deal to transfer control of TGK-1 to a Russian strategist. London means that you need to prepare for the high price of accommodation. This is important for maintaining the current stock quotes of TGK-1 at high levels,” the analyst is confident.

The final formation of TGK-8 before the additional issue may happen very soon, while the new shareholder of Kuban energy assets - Promregion-Holding CJSC - is ready to support the inclusion of Kuban Generation in TGK-8 (RBC daily)

RBC daily recalls that RAO UES hoped to fully form the target structure of TGK-8 by merging the Kuban Generating Company with it, and also to receive a positive decision from shareholders on the issue of an additional issue of TGK-8 in the first quarter of this year. However, the holding's plans were frustrated by YUKOS (it owns 25% of the shares of the Kuban Generating Company), which twice blocked the consolidation, as a result of which RAO even came up with a way to form TGK-8 without Kuban Generation. However, now the decision to include Kuban Generation into TGC-8 can be made at an extraordinary meeting of shareholders, the date of which will be determined at the end of May. The fact is that the new shareholder of YUKOS energy assets in Kuban and the Stavropol region, CJSC Promregion-Holding (PRH), acquired them at an auction on May 3 for 4.9 billion rubles. According to RBC daily, he will vote for joining. LUKOIL, which is associated with the winner of the auction, denied that PRH represents the interests of the oil company. At the same time, today the deadline for accepting applications for the exchange of shares from shareholders of the Kuban Generating Company who voted “for” or did not take part in the voting at the extraordinary general meeting of shareholders (held on January 18, 2007) on its reorganization by merging with TGK-8 ends.
Experts are confident in the success of the energy holding's plans. Senior electric power analyst at Antanta Capital Investment Company D. Terekhov believes that PRH will vote for the merger of the Kuban Generating Company with TGK-8. A. Serov from Financial Bridge Investment Company agreed with him, adding that PRH already has 16% in TGK-8. “Although this does not exclude possible bargaining between PRH, RAO UES and TGK-8 for the terms of consolidation,” D. Terekhov emphasized. According to him, TGK-8 has a chance to enter a fully consolidated placement. The analyst also believes that PRH will participate in the additional issue of shares of the company “and will probably win.” According to D. Terekhov, consolidation is theoretically capable of increasing the investment attractiveness of TGC-8.

As RBC Daily learned, following Gazprom and MMC Norilsk Nickel, O. Deripaska's aluminum holding Rusal adopted its energy strategy.

As RBC Daily learned, following Gazprom and MMC Norilsk Nickel, O. Deripaska's aluminum holding Rusal adopted its energy strategy. Meanwhile, unlike the gas monopolist and the nickel giant, the aluminum concern intends to focus on building its own generation and purchasing coal mines, rather than on buying up existing energy capacities. As a source in Rusal explained, the company's management believes that the shares of OGK and TGK are greatly overvalued by the market, and do not want to overpay for them. However, as it turned out, participation in additional issues of a number of territorial and wholesale generating companies, as well as the purchase of energy sales companies, is not excluded; big plans are also laid for cooperation with Rosatom in the field of nuclear energy development. Moreover, it was initially assumed that floating nuclear power plants could supply energy-intensive production with energy, however, according to RBC Daily, this idea was not abandoned at Rusal.
Finam Investment Company analyst S. Birg believes that the concern will actively participate in the acquisition of large blocks of shares in existing generating companies. “For example, the company was considered one of the contenders for power plants spun off from Kuzbassenergo,” he said. “Now Rusal may be interested in the opportunity to increase its presence in Irkutskenergo, TGK-13, OGK-6 and OGK-4.” The generating capacities of these companies are represented in the main regions where the main assets of the company's aluminum division are located - the Irkutsk region, Krasnoyarsk Territory and Khakassia. The change in Rusal's strategy is understandable before the IPO, which could take place in the next year and a half, emphasized Alfa Bank analyst V. Bogomolova. “Investors will be interested in the energy component of Rusal’s business,” she is sure. “Therefore, the company’s main interest in the energy sector in the near future may be a focus on providing energy to its own enterprises.” In addition to its own funds, according to V. Bogomolova, Rusal can also claim funds from the Investment Fund, as was the case with BEMO in the Krasnoyarsk Territory.

The board of directors of Canadian LionOre Mining called Norilsk Nickel's offer more advantageous compared to Xstrata's offer (RBC Daily, Vedomosti)

RBC daily, recalling Norilsk Nickel's intention to acquire 100% of the shares of Canadian LionOre Mining for $4.7 billion, notes that the day before both companies exchanged positive reviews about a possible deal to sell the Canadian company. Thus, LionOre released a message that the company’s board of directors called Norilsk Nickel’s offer more profitable compared to Xstrata’s offer. At the same time, LionOre said in a statement, the second bidder has until May 14 to change its offer. It is until this time that the board of directors of LionOre will not be able to recommend its shareholders to accept Norilsk Nickel's terms. In turn, the general director of the Russian company D. Morozov said that this proposal provides LionOre shareholders with the opportunity to receive significant income. As Norilsk Nickel emphasized, the proposal will be valid for acceptance by shareholders of the Canadian company until the evening of June 18, Toronto time, where LionOre's headquarters are located.
The newspaper believes that in the current situation everything is not as obvious as it seems at first glance. At the very least, Xstrata representative K. Divver emphasized that the company still has time to decide whether to increase its offer or not. Moreover, she added, the approval of Norilsk Nickel's proposal expressed by the board of directors of LionOre "does not mean that the company has already accepted or supported it." Industry experts are also inclined to believe that only the first round has ended in the fight for LionOre. “Further bargaining is possible,” MDM Bank analyst A. Litvin does not rule out the possibility. In his opinion, rivals can arrange at least one more round of bidding, as a result of which the price for LionOre could increase by another 15-20%. “The current position of the board of directors of LionOre is nothing more than an element of further bargaining,” says V. Zhabin from BrokerCreditService Investment Company. At the same time, according to A. Litvin, it is quite possible that other participants will join the race for LionOre - for example, VNR Billiton: “Metallurgists now have a lot of free funds, but there are not so many attractive nickel assets in the world.”
Continuing the topic, Vedomosti notes that in the struggle between Norilsk Nickel and Xstrata for the Canadian LionOre, the Russians have a trump card: the board of directors of LionOre recognized the offer of Norilsk Nickel, which offered almost $800 million more for LionOre than Xstrata, as more profitable. True, it is too early to celebrate the victory of the Russian company. Xstrata warned it may increase its offer.
Experts are confident that the fight for the Canadian company will be fierce. The deal with LionOre will provide Xstrata with access to the top three largest nickel producers, and Norilsk Nickel has long been expected to expand beyond the country and make major international deals, notes Deutsche UFG analyst A. Pukhaev.
Xstrata is famous for the fact that if it wants something, it does not like to give it up, Bloomberg quotes Intersuisse Ltd analyst P. Arden. “Now there may be a slight increase [in supply], but after that there may be six more small increases until we reach the final price,” he said. Both companies have money to increase the offer, says A. Pukhaev. Norilsk Nickel has already announced that it has agreed on a large loan arranged by Paribas and Societe Generale. Sources in banks said that we are talking about $5 billion. Norilsk Nickel representative D. Usanov refused to comment on the possibility of Norilsk Nickel increasing the offer for LionOre.
Meanwhile, LionOre's capitalization has already exceeded the price level offered by Norilsk Nickel. So, as of May 9, it was $4.8 billion.

Norilsk Nickel does not think of sitting in the “domestic trenches”, as it might have seemed a year ago: MMC acquired the nickel assets of the American OM Group for $408 million, and a week ago announced its intention to acquire the Canadian LionOre (Vedomosti, Expert, "Moscow's comsomolets")

"Vedomosti" in the "Company of the Week" section publishes an article dedicated to Norilsk Nickel, in which they emphasize that the company does not intend to sit in the "domestic trenches", as it might have seemed a year ago. Then, as you know, Norilsk Nickel adopted a development strategy until 2020, which was based on the development of the existing production of Norilsk Nickel - in Taimyr and the Kola Peninsula, as well as new projects in Russia. There was no place for foreign expansion in the strategy. Norilsk Nickel is eyeing various assets and monitoring corporate transactions in the sector, but will not participate in consolidation processes, the current general director of the company, D. Morozov, assured then. “Metal prices are at historical highs. Our goal is to maintain our position as one of the lowest-cost producers in the industry. We do not see how additional value can be created for shareholders through the purchase of expensive assets,” he explained.
However, less than a few months later, everything changed. We started, as usual, small. The company acquired the nickel assets of the American OM Group for $408 million. And now Norilsk Nickel is preparing for a much larger deal: a week ago it announced its intention to acquire Canadian nickel, copper and gold producer LionOre. The fact that the Swiss Xstrata, whose revenue is four times, and whose net profit is one and a half times higher than that of Norilsk Nickel, has already set its sights on this company, does not bother the managers of the latter. The Swiss previously agreed with LionOre to purchase the company for $4 billion, and Norilsk Nickel offered $4.77 billion without any approval. As a result, LionOre management announced support for the Russian company’s offer.
True, as Vedomosti notes, Norilsk Nickel is still far from victory. As you know, Xstrata management is famous for its uncompromising character, and the Swiss have already warned that they may put forward a new offer. It is still unknown: is Norilsk Nickel ready for a price war for LionOre? The newspaper only notes that Norilsk Nickel has no experience of such battles, and other Russian metallurgists have not yet withstood such confrontations.
According to the publication, entering the major league requires new skills from domestic businessmen, primarily the ability to fight with competitors for the right to purchase public companies. However, it will soon become clear: which of our people will be the first to master this art.
"Expert" touches on the topic of Norilsk Nickel's possible acquisition of the Canadian company LionOre Mining. At the same time, despite the statement of the General Director of MMC Norilsk Nickel D. Morozov, who explained the interest in the Canadian company with the desire to diversify the business and expand the geography of activity, it seems to the magazine that the main reason is still different. Norilsk Nickel is experiencing certain difficulties with the development of production based on its key assets in the Norilsk ore region and the Murmansk region, the weekly emphasizes, explaining that the share of rich ores there is decreasing, capital-intensive and time-consuming work is required to maintain production and modernize extremely outdated metallurgical production. According to the publication, in the coming years the company will only be able to maintain, and not increase, the production of non-ferrous metals in the Russian Federation, at the same time, all of Norilsk Nickel's main competitors have the opportunity to implement many new projects to expand production. So, without doing anything, the company may lose its leadership position in a key segment of its business, Expert believes. In this regard, the magazine believes, the acquisition of a small but dynamic LionOre, which has significant - about 3 million tons - reserves and plans to increase metal production from 34 thousand tons to 80 thousand over the next 5 years, is an ideal option.
Moskovsky Komsomolets also writes about Norilsk Nickel's intention to buy LionOre Mining International for $4.77 billion. For these purposes, the Russian company issued mandates to arrange a loan to Societe Generale and BNP Paribas. According to Norilsk Nickel CEO D. Morozov, the addition of LionOre will lead to an increase in the volume of metal production, expand the geography of activity and will allow the implementation of projects based on assets with a long-term raw material base and low production costs.

The development company OJSC RTM is in such need of money that it will hold an IPO without waiting for its capitalization to approach $1 billion: within a month, RTM plans to sell 28.6% of shares on the RTS and through private placements (Kommersant).

As Kommersant writes, the development subsidiary of the Marta holding, RTM OJSC, is in such need of money that it will hold an IPO without waiting for its capitalization to approach $1 billion, as previously planned. Within a month, RTM plans to sell 28.6% of the shares (of the authorized capital increased after the additional issue) on the RTS and through private placements. The organizer of the IPO, ING Bank, has an option to purchase 2.8% of the company's shares, which is valid for 30 days from the date of announcement of the placement price, that is, from May 22, RTM said. The owners of RTM will sell their securities. They promise to use all the proceeds to buy back the shares of the additional issue. The price of one ordinary share is set at $2.6-3.25, and the price of GDR is $13-16.25. Thus, the capitalization of RTM during the placement will be only $260-325 million, and during the IPO RTM will gain $67-92 million A month ago, analysts assumed that RTM was worth $650-900 million. Director of the capital market department of Cushman & Wakefield/Stiles & Riabokobylko I. Kutnov noted that the latest placements of developers were carried out with a coefficient of 2 BV (book value of assets). In the ING BV report, RTM at the end of 2006 is equal to $133 million. “Previously, RTM did not disclose the amount of debt, so analysts gave greatly inflated estimates of the company’s value,” explained one of the investment bankers. And a source close to Rosevrodevelopment claims that such a debt amount as RTM’s is critical for a development company.

According to Vedomosti, in mid-June Rambler will close the deal to acquire a 51% stake in the Begun company. In addition, Rambler has an option that allows it to buy the remaining 49% of Begun from Finam. Analysts estimate the entire deal at $112.5 million.

According to Vedomosti, in mid-June Rambler will close the deal to acquire a 51% stake in the Begun company from the investment company Finam: the parties have reached an agreement in principle and are at the stage of signing documents. Representatives of Finam and Prof-Media have so far declined to make official comments. Begun CEO A. Basov only hopes that Rambler is interested in the deal, and that deeper integration of the companies will have a positive impact on the efficiency of his business.
Meanwhile, there is another option: it gives Rambler the opportunity to become 100% owner of Begun and the parties are already negotiating the terms of the purchase of the remaining 49%, says a source close to one of the participants.
At the end of 2006, Rambler shares began to rapidly rise in price, and they reached their peak value in April 2007 - on April 16, quotes amounted to $55 per share. Senior analyst at MDM Bank E. Bazhenova attributes this growth to the acquisition of a controlling stake in the company by V. Potanin's Prof-Media holding at the end of 2006. Rambler now has a strategic investor with funds for major acquisitions, including the purchase of Begun, and this has reassured investors, Bazhenova believes. But Rambler shares grew not only in connection with the Prof-Media deal - investors included the financial results of Begun in the assessment of these securities, believes Aton analyst T. Kapustina. Since the beginning of the year, this company has added about 30% to Rambler's value (or $16 per share), she adds. Both analysts value Begun at $150 million - thus, 75% minus 1 share of this company could be worth up to $112.5 million. Yandex CEO A. Volozh does not expect a serious change in the balance of power in the market after Begun " will go to Rambler. He says he has long considered Runner to be part of a rival company.

In preparing this issue of the Monitor, materials from the following publications were used: “ Kommersant ”, “ Vedomosti ”, “ RBC daily ”, “ Expert ”, “ Moskovsky Komsomolets ”, “ Arguments and Facts ”, “ Novaya Gazeta ”, “ Business & Financial ” Markets", " Newspaper ".

Read about further developments in the next issue of the Monitor at 16:00.