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. Last Updated: 07/27/2016

Timetable Unveiled for Gazprom Sale




Bids for a 2.5 percent stake in Gazprom, the world's largest gas company, will be accepted until Dec. 18 and the results will be announced Dec. 19, Russian officials said Thursday.


Bidders will have to deposit 375.7 million rubles in the Federal Property Fund's account by Dec. 16, said officials at the fund, which oversees privatizations.


The government is selling 591.8 million shares in Gazprom with bids starting at $651 million. The stake can be split between more than one investor by auction or commercial tender. Payment is to be made in rubles. The official starting date for the bidding was Wednesday


The government's main goal is to bring the funds into the state budget before year's end, Fuel and Energy Minister Sergei Generalov told reporters Thursday at a news conference.


The government needs every kopek it can get, but its deep economic crisis and the collapse of foreign investor confidence have forced it to cancel or postpone other key privatizations.


But analysts said Thursday the sale would be a success. They added that it probably would not be sold for much more than the initial $651 million price.


"We may be alone in this but, barring unforeseen circumstances, we do expect the sale to succeed," Moscow-based finance house United Financial Group said in a research note.


"This ought to be an asset that investors want. If they do not then what is there in Russia that is worth having at all?" added Stephen O'Sullivan, UFG's co-head of research.


"This is a sale that the country and the company cannot afford to see fail," O'Sullivan said.


Vladimir Nosov, an analyst at Flemings UCB, said he believed the sale would go ahead as agreement had probably been reached with potential buyers prior to the announcement.


"If Gazprom did not have an agreement with a potential buyer or buyers it would not allow the sale," Nosov said.


The sale is the most important privatization in Russia this year after its financial system collapsed in mid-August.


Russia recently canceled high-profile auctions of stakes in Svyazinvest national telecom holding company and the Rosneft oil company.


Germany's Ruhrgas, which recently gave Gazprom transit rights through its pipelines to other European countries, said in September that it might be interested in buying a stake in Gazprom. Itar-Tass said Thursday the firm had reconfirmed its interest.


Analysts said other potential buyers as well as Gazprom's strategic partners, Royal Dutch/Shell and Italian ENI, would probably prefer to buy Gazprom's shares from the company rather than the government.


O'Sullivan said $1.12 per share seemed fair, being only 15 percent above the American depositary receipt price.


"It is a small premium to pay for a 2.5 percent stake in what is a major gas company," he said.


Gazprom said Thursday that a deal had been struck whereby Ukraine would supply $1 billion of goods in return for debts for gas.


A deputy Gazprom head, Anatoly Podmyshalski, said the company had signed a transit agreement with Ukraine to send 125 billion cubic meters of gas to Europe in 1999.