Vedomosti reports that shareholders of KuibyshevAzot (KuAz) have approved the transaction to sell to International Finance Corporation (IFC) 3.5% of its common shares. A total of 8.30 mn shares owned by KuAZ's subsidiary Kuibyshevazot-Invest are to be sold for USD 20 mn. Based on this data, the projected selling price is USD 2.41 per common share which nearly corresponds to the current market valuations, USD 2.42. The transaction is to be closed in February 2008. IFC is also expected to have a put option to buyback these shares until mid-2010 with possible prolongation.
The company plans to allocate the proceeds to the investment program, upgrade production facilities and increase output at Kurskkhimvolokno, acquired in late 2007.
IFC's BoD had approved the acquisition of the chemical company's shares back in August 2007. Initially, a 2% stake was slated for sale for USD 15 mn. However, the value of the transaction rose to USD 20 mn, as the amount of the stake was raised 3.5%.
The arrival of a portfolio investor is positive, both for KuibyshevAzot itself and minority shareholders, since this underscores the company's reliability and fairly good development prospects.
What's more, the presence of an international financial corporation in KuibyshevAzot's charter capital strengthens the company's chances to launch a successful public share offering. The IPO timing has yet to be approved. However, it will likely be launched as early as in 2008.
Our estimated target price of KuibyshevAzot (RTS: kazt) is $3.74 per share which implies over 50% upside potential and corresponds to a BUY recommendation.
0.553
1.6
