OAO TMK, the world’s largest pipe producer by output, plans to sell new shares to raise funds for investment projects and to improve its capital structure.
The board approved a potential sale of 56 million shares today, or about a 6 percent stake, according to a regulatory filing. The equities will be sold in Moscow and the company expects most to be allocated to investors other than TMK’s main shareholder billionaire Dmitry Pumpyansky, Vice President Vladimir Shmatovich said on a conference call.
While TMK said the price hasn’t yet been set, the offer could raise $144 million based on yesterday’s London close, according to Bloomberg calculations. The global depositary receipts slumped 5.9 percent, the most since March 3, to $9.65 today as the stock sank 4.8 percent in Moscow.
TMK, listed after an initial public offering in London and Moscow in 2006, had $3.6 billion of net debt at the end of 2013, with net debt to earnings before interest, taxes, depreciation and amortization of 3.88, data compiled by Bloomberg show.
The company doesn’t expect to sell at a discount given interest in the Russian market, Shmatovich said. TMK also sought to avoid diluting shareholders with a large offer, he said.
It sees interest from large Russian financial institutions in the shares, while a placement of the shares is also possible after second-quarter results due in August, Shmatovich said. TMK doesn’t see further placements in the next 12 months, he said.
“A potential share sale is almost neutral for TMK given the small impact on both dilution and leverage,” Oleg Petropavlovskiy, BCS Financial group analyst said today in a note. The positive news is that the free float may exceed 25 percent if the majority holder doesn’t buy stock, he said.