Transcript:
Olga Dergunova: The meeting that the Prime Minister held today was devoted to the privatisation plans of the largest companies included in the first part of the privatisation programme. In fact, we have clarified and discussed the measures we should take to implement our plans.
We discussed several companies, including the privatisation of Rostelecom. There is much to do, in particular we need to clarify the requirements of special subscribers [law-enforcement and security agencies, and government establishments] and the company’s financial results based on its annual reports, after which we will be able to structure a privatisation deal with due regard for the limits set by the company’s special and other subscribers and the market.
The second company we discussed is Sovcomflot, which is ready for privatisation. We have been discussing this for years, but this time we focused on clarifying the structure of the new deal. Under the previous deal, part of revenue was to be reinvested in the company’s recapitalisation and another part channelled into its budget. We also need to decide the method for selling the shares, because previously we planned to sell them on a public exchange. We discussed this two years ago, and last year we confirmed that the company was ready to sell its shares on the Moscow Exchange or the New York Stock Exchange. Taking into account the priority of developing an international financial centre in Moscow, we are now considering the expediency of such a dual listing. Maybe we should use the scheme that we used successfully to trade Alrosa’s stock and so opt for the Moscow Exchange. We’ll continue to discuss these two possibilities. But anyway, the company is ready for privatisation and is doing well [financially]. It’s impressive that we have these market leaders, despite the global economic upheavals, that are easy to structure for privatisation.
We also discussed other issues, but in less detail. You probably remember that they concern the sale of a 3% package of Transneft shares, which will allow the state to keep 75% plus one share in it in accordance with the Government’s privatisation plan, and up to 50% plus one share package of Aeroflot, as well as the privatisation of United Grain Company and other assets.
In short, we discussed the Moscow aviation hub and the preparations for our air assets, namely the consolidation of the state-owned shares of two airports: Vnukovo and Sheremetyevo. We have a roadmap, and the Ministry of Transport and the Federal Agency for State Property Management, which is working jointly with the Ministry of Economic Development, are structuring these assets in accordance with this roadmap.
Actually, it was a working meeting that confirmed our plans and clarified the direction. The next step is to submit proposals on these deals to the Government by June, just as we promised to do.
Question: So there will be no such deals in the first half of the year?
Olga Dergunova: No. As we said before, during the first six months we’ll be preparing these deals.
Question: But privatisation deals can be expected in the second half?
Olga Dergunova: Let’s put it this way: we don’t expect to sell in the first quarter as we make these preparations. You can expect to see some deals in the second quarter.
Question: You didn’t say anything about the Novorossiisk Commercial Seaport.
Olga Dergunova: We have discussed this issue but solely as an asset that requires additional restructuring. So we are continuing to discuss the best options, methods and approaches.
Question: Will the market improve in the second quarter?
Olga Dergunova: You know, the situation will likely not improve. In the second quarter, the agents will be better prepared for the Sovcomflot transaction. We’ll respond to questions about the structure of the transaction and the IPO location. Subsequent moves and “road maps,” as well as the Aeroflot IPO sequence, will become clear. We’ll have a better idea of specific the deadlines for doing this. Currently, as we said before the New Year season, we are preparing all these transactions, and we’ll start closing them in the second quarter and later.
Question: So, Aeroflot could still hold its IPO this spring?
Olga Dergunova: Theoretically, Aeroflot is a public liability company, and it’s always ready for an IPO.
Question: Does this imply a stake which is up to the controlling interest?
Olga Dergunova: Up to 50 plus one share, yes. We didn’t discuss anything else. Frankly, the plans that we discussed at the end of the year have been confirmed. And we are moving ahead. Thank God, there were no unexpected problems.
Question: Tell me please, do you expect to privatise RusHydro?
Olga Dergunova: We did not discuss this.
Question: And what can you say about the Rostelecom privatisation deadlines?
Olga Dergunova: As for the privatisation plan … again, nothing has been decided yet. We’ve only discussed the steps to structure this transaction. So we expect to formulate the various restrictions and requirements being voiced by the market and various consumers with regard to this asset, so as to propose the possible structure for this transaction. We didn’t intend to do this before, and we can’t do it any sooner.
Question: But is the sale possible in 2014?
Olga Dergunova: It’s possible. The Government’s plans stipulate this.
Question: Tell me, Mr Medvedev has said that the 2014 privatisation plan totals 200 billion. How much of this will be transferred into the budget?
Olga Dergunova: This entire sum is to become part of the budget.
Question: The whole 200 billion? Will everything go into the budget?
Olga Dergunova: 196 billion, in line with law on the budget. Rostelecom accounts for the lion’s share of this total, almost 150 billion.
Question: And did you discuss the privatisation of Rosneft?
Olga Dergunova: No, but this public asset is always a candidate for privatisation. Its shares are quite popular on the stock market, and their value continues to increase. The current share prices make it possible to adopt this decision anytime now. In the long run, it’s up to the Government and the President to make this decision. Theoretically the asset is ready.
Question: Did you discuss Russian Railways?
Olga Dergunova: Yes, we discussed Russian Railways. The decisions on the development of Russian Railways and investment in the Trans-Siberian Railway imply that the Russian National Wealth Fund should be the first to contribute an investment, and that additional issues should be made in order to implement this strategic long-term project. After completing these operations, we will move to float an estimated 5% of corporate shares on the market.
Question: And what can you say about specific deadlines?
Olga Dergunova: I’d like to remind you that these deadlines depend on two things: first, the publication of the law and amendments to the law on the specific features of railway transport. This law still bans the sequestration of shares. In effect, we’ll have to amend these provisions, so that a 5% stake can be sequestrated and sold by the state from its property. So we have to amend the law first. This coincides with the trend of money being contributed in the form of additional issues for corporate development purposes including the Trans-Siberian Railway project. After that, it would be possible to close a privatisation transaction. We’re not dismissing this approach; this simply implies the coordination of the deadlines. You see, Trans-Siberian Railway investment volumes presuppose the special terms for doing this.
Question: Can you provide any specifics on the Rostelecom transaction? Have you decided on a privatisation option?
Olga Dergunova: No. We aren’t discussing this issue yet, that discussion is still a long way off.
