Russia's TMK to raise $166 mln in secondary offering for VTB buyback

2 February 2017

Russia's TMK the country's largest maker of steel pipes for the oil and gas industry, said it was selling a 13.44 percent stake to raise funds to purchase its own shares from lender VTB.

TMK said it was offering up to 138,888,888 ordinary shares in the secondary public offering (SPO), the same number of shares it intends to buy back from VTB, Russia's second largest lender.

The shares will be offered at between 74.5 roubles ($1.24) and the market price, the company said in a statement, suggesting it would raise around 10 billion roubles ($165.79 million).

Banking sources told Reuters in December that TMK was aiming to raise around $200 million from the SPO.

It was unclear at what price VTB would agree to sell its stake and the lender declined to comment. Two banking sources said TMK plans to close the book on Thursday.

TMK's shares fell sharply following the announcement and were down 6 percent by 0800 GMT at 78 roubles per a share, making its stock the second worst performer on the Moscow Exchange's Metal and Mining Index.

"There could be pressure on TMK shares as a result of this news. In the longer run, the placement should positively affect the liquidity of TMK's shares," Aton analysts said in a note.

Aton is acting as a bookrunner on the offering, together with Credit Suisse, Morgan Stanley and VTB, TMK said.

Recent fund raising efforts by Russian steelmakers have pointed to increased confidence in the sector, buoyed by an improvement in the national economy and higher steel prices.

Russia's largest steel producer, NLMK said in December it could issue Eurobonds this year and competitor Evraz is considering a convertible bond issue.