MOSCOW, May 29 (RIA Novosti) Rostelecom to quit NYSE/United Technologies quits Russian defense market /Pipe Metallurgical Company looks for expansion in Europe/TNK-BP stands no chance of keeping Kovykta license/Warsaw threatens to block Russia's WTO entry
Gazeta.ru
Rostelecom to quit NYSE
Rostelecom, Russia's largest long-distance telecommunications operator, which first hit the American market in 1998, may quit the New York Stock Exchange (NYSE) and move to European floors.
The reason for the move by world companies is tougher trading rules introduced in the United States. Besides, Rostelecom's bow-out may be due to a change in the operator's status.
Large Russian companies have a history of quitting the NYSE. In the summer of 2006, for example, the Tatneft oil company got de-listed from the American floor, with its shares now trading on the London Stock Exchange (LSE).
Large-scale European companies also do it. Scandinavian telecommunications operator Telenor, for example, announced its withdrawal from the American Nasdaq exchange in May of this year, also preferring to move to the LSE.
Departing companies explain their decisions by the growing rigor of financial accounting standards for issuers.
"Earlier, they were rigorous, too, but companies meeting their requirements enjoyed a certain status with investors. Now that status is no guarantee among potential investors," explained Belov.
Experts believe the Russian operator has some other, "hidden" reasons for leaving.
Ilya Fedotov, a leading share market analyst at Veles-Kapital brokerage, thinks Rostelecom's decision is due more to the uncertainty surrounding the company's future.
Recently, Russian authorities started speaking of Rostelecom's possible pullout from the Svyazinvest holding. If so, the operator will come under government control.
One of the analysts, who wished to remain anonymous, said that the possible American de-listing and probable withdrawal from Svyazinvest are all links in a single chain.
Should the company leave the American exchange, its shares are sure to drop in price, with the state able to buy out the operator's minority stakes at a lower cost.
In addition, the less restrictive rules of European and Russian bourses will make it easier and quicker to alter Rostelecom's standing.
Kommersant
United Technologies quits Russian defense market
United Technologies, an American multinational conglomerate based in Hartford, Connecticut, and the 20th- largest U.S. manufacturer, has announced its intention to sell a 12% stake in Proton - Perm Motors, a leading Russian rocket-engine maker, to the Moscow-based Khrunichev State Research and Production Space Center, the largest national space industry company, which now controls over 85% of the former.
Industry experts said United Technologies, which cannot effectively run the company, has decided to quit the defense industry market, together with other U.S. investors.
A source told the paper that preliminary talks had been held, and that the U.S. company is ready to relinquish control of Proton - Perm Motors because it is not involved in corporate management. However, the sides have not yet agreed on a price.
He said United Technologies wants to get $12-15 million for its stake.
A source at Proton - Perm Motors said President Vladimir Putin had decreed the establishment of a state-controlled holding company based on the Khrunichev Center in early 2007.
The new company will control four subsidiaries, namely rocket manufacturers with the status of federal state integral enterprises.
Proton - Perm Motors, which turns out RD-275 first-stage liquid-propellant rocket engines for the Proton-PM heavy launch vehicles, earned 2.2 billion rubles ($85.01 million) in 2006 and also received a 13.8-million ruble ($533,230) net profit.
United Technologies, which bought into Proton - Perm Motors in 1997, scaled down operations after the company was taken over in 2003 by another owner (after the private investment company Interros it was Guta Bank, and now it is Vneshtorgbank and consumer giant AFK Sistema).
Andrei Ionin, an expert with the Center for Analysis of Strategies and Technologies, said U.S. companies are leaving the Russian defense sector, the more so as the Russian space industry is highly politicized, and United Technologies is merely following suit.
He said Lockheed Martin withdrew from a joint project with the Khrunichev Center last October.
According to Ionin, United Technologies has not announced any joint projects with Proton - Perm Motors and cannot effectively run the company.
Vedomosti
Pipe Metallurgical Company looks for expansion in Europe
Pipe Metallurgical Company (TMK), Russia's largest producer of pipes and pipe products, has submitted a preliminary application for the purchase of a 40.7% stake in Polish pipe manufacturer Walcowania Rur Jednosc (WRJ). Experts assess the transaction at about $100 million.
In 2006, TMK sold over three million metric tons of pipes earning $3.38 billion, with net profit of $460.6 million. WRJ's annual capacity is 250,000 metric tons of seamless pipes, but the project has not been completed yet.
The TF Silesia state-run agency holds a 40.7% stake in WRJ and the engineering company Enpol a 19% stake.
TMK held an IPO last year, and is now looking for opportunities to expand its business.
It is negotiating unification with Ukraine's Interpipe, looking simultaneously toward the Polish market.
On May 28, Polish media reported that TMK and Poland's Alchemia had submitted applications to TF Silesia for the purchase of a 40.7% stake in WRJ. TF Silesia and TMK declined to comment on this information but a TMK source confirmed the report.
Officially, a tender for the sale of WRJ's state-owned share packet has not been announced, and the submitted application puts no obligations on TMK, the TMK source explained.
The construction of WRJ began in 1996, but the project has not been completed for lack of state funds. TMK displayed interest in WRJ in late 2004 and is now negotiating the matter with TF Silesia.
However, all attempts to privatize the company have been disrupted so far. If TMK is lucky this time, WRJ will not be its first foreign asset. TMK owns two plants in Romania - TMK Artrom (producing pipes) and TMK Resita (billets).
WRJ will fit well into this set of assets strengthening TMK's East-European business, said Denis Nushtayev, an analyst with the Russian investment company Metropol.
The East European market is of key importance for TMK's exports, and the purchase of WRJ will help the Russian company to save on duties, which constitute 24%-25% in Europe.
The asset will cost TMK less than $100 million, which is not expensive, Nushtayev said.
Business & Financial Markets
TNK-BP stands no chance of keeping Kovykta license
Russian-British joint oil venture TNK-BP may soon lose its license to develop the Kovykta gas field is Eastern Siberia that will most likely be taken over by the Russian gas monopoly Gazprom.
On Monday, the Irkutsk Region Arbitration Court terminated the lawsuit initiated by RUSIA Petroleum, a local company controlled by TNK-BP (62.4%). Experts predict that the settlement of the drawn-out dispute will send TNK-BP stocks up.
TNK-BP stands practically no chance of preserving the license to develop the Kovykta gas and condensate field after the Arbitration Court has ruled to terminate the lawsuit initiated by the TNK-BP subsidiary in a bid to dispute its withdrawal.
However, the company is far from admitting defeat. "We are disappointed with the verdict and will appeal again," said Alexander Shadrin, TNK-BP press spokesman.
"RUSIA Petroleum can only preserve the license if Gazprom becomes one of the shareholders, owning a 75% stake," says Georgy Ivanin, an expert with Antanta Capital investment company.
Market players no longer doubt that Gazprom will succeed in taking over the rich Kovykta field. The Federal Agency for the Management of Mineral Resources will be deciding on the Kovykta license on June 1.
"Two scenarios are possible here," says another expert, Konstantin Cherepanov from Rye, Man and Gor Securities. "Either Gazprom will set up a joint venture with TNK-BP and hold its controlling stake, or it will buy the Russian-owned 50% stake in TNK-BP."
Experts seem cautious in estimating TNK-BP's share in Kovykta. Yevgenia Dyshliuk, an analyst with Uralsib financial company, suggests that TNK-BP's controlling block could be worth around $20-$25 billion.
Still, experts do not think the potential loss of Kovykta will seriously affect the company's share price. Cherepanov believes the company "is undervalued, so its price cannot sink even lower when the deal is made."
On the contrary, the settlement of this dragged-out dispute could send its shares soaring, he said.
Novye Izvestia
Warsaw threatens to block Russia's WTO entry
Polish President Lech Kaczynski said that the European Union might block Russia's WTO entry because of Moscow's continued embargo on meat imports from Poland.
Russian experts believe the problem should be the concern of phytosanitary services rather than policymakers.
The Polish leader made the statement shortly after European Commission spokesman Peter Power said EU support for Russia's admission into the WTO was not automatic. He noted that bilateral problems were becoming serious obstacles.
Alexei Alekseyenko, of the Russian Federal Service for Veterinary and Phytosanitary Supervision, is convinced that only the phytosanitary services of both countries can resolve the problem but his Polish colleagues are not being cooperative.
"They haven't even sent us the results of Polish meat inspections. Supposedly, EU experts have qualified this meat as safe to eat," he reported.
He said Russia has long proposed that the EU jointly monitor the Polish veterinary service's operations, but has not yet received any reply.
"How can EU countries make us lift the ban if they themselves are reluctant to see Polish meat in their markets?" queries head of the National Meat Association executive committee Sergei Yushin.
He said that last week German police confiscated five tons of inedible Polish meat.
He is convinced that Warsaw's losses from the ban are exaggerated. In his estimate, before the embargo Poland supplied Russia with 12,500 kilos (27,500 pounds) of pork and 1,500 kilos (3,300 pounds) of beef, as well as 5,000 kilos (11,000 pounds) of cattle for slaughter, or about $45 million in monetary terms.
After the raw meat supplies were banned, imports of Polish pigs jumped from 5,000 (11,000 pounds) to 22,000 kilos (48,400 pounds) in 2006, or by $30 million.
Poland's threat to block Russia's WTO entry has not materialized into anything serious so far. Negotiators from the Ministry of Economic Development and Trade are hoping to settle the Russian-Polish dispute.
RIA Novosti is not responsible for the content of outside sources.
