Volga-Dnepr Group / Press-center / Media Coverage

Volga-Dnepr dreams of IPO

10/29/2006

It will be possible when the Group reaches an understanding with its minority shareholders.

VDA plans to arrange IPO in the first quarter of 2007. These plans seem feasible if corporate conflict with minority shareholders no longer exists. Although, minorities have a number of challenges against Volga-Dnepr top-management, and the conflict is unlikely to solve at once.

"IPO arrangement is vital for us; the longer it takes to address shareholders' issues, the more challenging is the task of IPO timely arrangement", - said Sergey Shklyanik, VD Group Senior Vice-President. His words are not groundless: recently JSC LPH-Holding, non-amicable shareholder, purchased 33,88% of VDA shares from KASCOL Group. According to VDA analysts, this purchase was made for the benefit of Region Group. Sergey Shklyanik stated that strategic decision on shares offer needs the 75% shareholders' consent. "If Region Group objects to it, the project won't go", - he said. - "The conflict entered the stage of indirect negotiations and legal proceedings. There are two ways out: shareholders' agreement or selling shares by any Party".

Region Group refused to comment on the issue. Meanwhile, according to the source close to VDA minority shareholders, IPO arrangement is not feasible due to non-transparency of VD Group business. "Minority shareholders suspect the VDA asset stripping. The shareholders' meeting raised the point, that company loss in 2005 reached USD 4 million, while the Group gains equaled to USD 4 million. No satisfactory answer was given to that point", - noted one of the shareholders' representative. "Majority shareholders always supported IPO", - commented Sergey Nedoroslev, KASCOL Group co-owner, – but how shall Alexey Isaikin tell the new investors about uncontrolled disposition of 16% shares belonging to majority shareholder for just USD 3 million, while total estimated cost of Volga-Dnepr Group shares equals to USD 500 million?"

Although, Volga-Dnepr Group President has already managed to avoid one conflict, namely, divorce with his wife, who claimed rights on the company shares. "I handled the issue by separation deed, - said Alexei Isaikin. – We agree that I need shares for business and she gets money and property. I believe she is not considered as a new shareholder any more".

The planned IPO arrangement requires other activities. The Group has already planned to go public on 15-20% of its shares, but still uncertain where to do this. Furthermore, Sergey Shklyanik notes that the Group is going to restructure Volga-Dnepr Airlines into open joint stock company, which will take a month and a half. The Group Directors believe that Volga-Dnepr Group has to reach the planned financial level prior to IPO.

RBC, daily

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