At the end of December 2016 “AvtoVAZ” has completed additional stock issue. Offered value of shares was 29 billion roubles and the biggest part in the amount of 25 billion rubles was targeted by Renault. But in the end the joint company of the French automaker, Nissan and Rostec – “Alliance Rostec Auto” purchased shares of “AvtoVAZ” worth 14.85 billion rubles. Remaining shares worth 11,25 billion rubles were paid for by “Renaissance capital”, and its Renaissance Securities (Cyprus) received 24,09% of the shares. Since then neither the “Renaissance capital”, nor the owners of “AvtoVAZ” explained why the investment bank bought shares in “AvtoVAZ”. Someone close to “Renaissance capital” just commented that it was their client transaction.
Details of additional stock issue were revealed in the Renault’s 2016 report and it’s said that the “Alliance Rostec Auto” participation in the additional stock issue was financed by the French automaker. It provided the joint copmany with a loan to buy a “financial instrument worth 180 million euros, largely secured by the share in “AvtoVAZ”, despite the fact that it does not make “Alliance Rostec Auto” B.V. the legal owner of any of those shares of “AvtoVAZ”.
As a result of the December stock issue the share of “Alliance Rostec Auto” in “AvtoVAZ” decreased from 74.5 to 64.6%, but given the financial instrument it supposed to control 88.69%, and Renault indicates 65,01% in its financial statements. The reported by Renault amount of 180 million euros at the exchange rate at the end of December is the equivalent of 11.25 billion rubles spent by Renaissance Securities (Cyprus) to buy shares of “AvtoVAZ” which matches the stake size of 24.09%.
Representative of “Rostec” insists that Renaissance Securities (Cyprus) is portfolio investor: “We can only rejoice at this decision”.
If the threshold exceedes 75% the majority shareholder is obliged to make the offer to minority shareholders. Apparently, Rostec and Renault-Nissan chose not to do so and engaged a partner in the deal. And even the disclosed fact that the package was de facto acquired for Renault’s money does not give minority shareholders the right to request an offer. Perhaps this is a deal with an eye to the future, says the analyst of “Aton” Michael Ganelin. The involvement of “Renaissance capital” will enable to carry out a compulsory redemption of shares of minority shareholders in the future. This can occur after the second emission, which should take place until mid-2017, the expert thinks.
The December and the forthcoming additional share issue are directed to the recapitalization of AvtoVAZ. Next round of additional securities will be amounting to 95.3 billion rubles. Securities can be paid by both money and debt relief. It is assumed that “Rostec” and Renault will convert AvtoVAZ debt into shares for the total amount of 85 billion rubles.
After the placement of new securities the share of “Alliance Rostec Auto” will grow to about 85% and if Renaissance Securities (Cyprus) would not buy stocks its stake will to fall to around 10%. Citing sources close to AvtoVaz shareholders Reuters reported on March 27th that the shareholders of “AvtoVAZ” are considering the possibility of delisting. For the forced buyout of minority shareholders “Alliance Rostec Auto” needs to consolidate 95%, but before that it needed to declare the offer and purchase not less than 10%. One needs to be sure that those 10% will be collected and in the case with minority shareholders of “AvtoVAZ” it is impossible to guarantee – there are thousands of them across the country. This justifies the appearance of “Renaissance capital” as a new major shareholder – “Alliance Rostec Auto” can buy this package, thereby increasing its stake to 95%.
Now “it is premature to talk about any plans and intentions in respect to the acquisition of “Renaissance Securities” shares, said “Rostec” representative. He just explained that now the major shareholders are concentrated on the second phase of recapitalization.