Mo Tu We Th Fr Sa Su

Subscribe to news


# Top Titanium Producer VSMPO-Avisma Plans 2006 IPO

All news #

July 21 2005

The world's top titanium producer, Russia's VSMPO-Avisma, plans an initial public offering abroad in the first half of 2006, board chairman Vyacheslav Bresht said on Tuesday, June 21. "It's our strategic goal and we will be following it," Bresht, quoted by Reuters, told an investor conference organized by Renaissance Capital investment bank.

The IPO will come after the merger of VSMPO and Avisma is completed, which Bresht said was expected by July 2005.

The two companies said in September 2004 that they would merge to form VSMPO-Avisma and the shares are already traded in Moscow, where they were up 5.19 percent to $111.50 on Tuesday, June 21. Russia's Federal Anti-Monopoly Service has approved the merger on condition that the new company does not set high prices.

Bresht did not say where the shares would be listed. He said the IPO would follow a first level American Depositary Receipts (ADR) issue for up to 20 percent of the company's shares, to be traded in New York.

Proceeds of the IPO would help increase production of titanium sponge, given expected structural supply deficits of the raw material for production of titanium metal which is widely used in the defense and civil aviation industries. Demand from new titanium-intensive airliner programs -- the Airbus A-380 and Boeing-787 Dreamliner which are expected to fly in 2006 and 2008 respectively, were expected to boost offtake massively, he said.

Bresht said the company expected revenues in 2005 at between $700 million and $750 million after $557 million in 2004, with net income at between $115 million and $125 million after $113 million a year ago. It anticipated earnings before interest, tax, depreciation and amortization (EBITDA) of between $200 million and $220 million after $167 million in 2004.

Bresht said he and Vladislav Tetyukhin, VSMPO-Avisma's general director, who each control 30 percent of the company, plan to buy a 13.4 percent stake in the firm from holding company Renova. Renova is backed by oil and metals tycoon Viktor Vekselberg.

"My partner, Mr. Tetyukhin... and myself have made a decision to acquire the shares of Renova," Bresht said. Under an internal agreement between the three major shareholders, if one of them offers to sell his stake to the other two, they must either buy it or sell their own stakes to the initiator of the deal at the proposed price. Renova has offered to sell its stake to Bresht and Tetyukhin for a total of $148 million, or $96 per share. Bresht said he and Tetyukhin were negotiating loans with several banks, which he did not name, to pay for the stake. "The issue of financing is practically solved," Bresht said. He added that, under the agreement with Renova, they had to reply to its offer by July 25.