Moscow Times - June 8, 2004

Investors jittery about the risk-fraught Russian media sector need not be wary of buying into RosBusinessConsulting because its news coverage is too dull for the Kremlin to care, CEO German Kaplun said Friday.

Previewing RBC's second roadshow later this month, Kaplun said the software, information technology and business television specialist will offer 15 million new shares to help fund expansion, an emission expected to raise $20 million.

Kaplun told investors not to worry about state interference in RBC. "We're safe because we never comment on political affairs," he said.

Russia's answer to Bloomberg, RBC is an information agency that started as a news wire, opened up an IT department that now accounts for a third of its revenues, and last year opened the country's first dedicated 24-hour business television channel.

RBC also recently teamed up with U.S. business channel CNBC in a joint programming venture.

Hoping to finance the purchase of an undisclosed IT firm with its second share emission, Kaplun said RBC would never draw the Kremlin's ire because it only offers economic analysis, while its political coverage is very dry.

"Of course if there's a political event, we report it, but we're not going to say whether it's good or bad," said Kaplun, whose RBC stake will shrink from 23.8 percent to 20.7 percent after the June 16 emission.

RBC TV is gradually garnering viewers, mainly by cable in Moscow and St. Petersburg. Last year, television accounted for 12 percent of RBC's $3.7 million net profit, on sales of $48.5 million. In 2004, the company predicts earnings of $10.8 million on sales of $71.13 million. With a core audience of 1.6 million, RBC says its ambitions are not great enough to warrant an NTV-style takeover. "We have a niche audience and we'll never become a channel of national importance," Kaplun said.

The company's five core shareholders will place 11.16 million existing shares with selected Russian and international investors at the same time as 15 million new shares are issued, of which the core shareholders will receive 11.16 million.

The shares will be priced June 16, with trading in newly placed existing shares beginning the next day.

The percentage of RBC's free-float shares will rise to 36.1 percent, from 26.5 percent, the company said.

RBC's shares were down 3.5 percent at 55.50 rubles late Friday.

RBC became the first Russian company to go public on local bourses in 2002 when it raised $13 million on the RTS and MICEX exchanges. The company's placement managers expect the second emission to sell at a price towards the bottom half of its spread, "what with the way the market is performing right now," said a company official, who asked not to be named.

The shares of most companies listed domestically were distributed during privatization through auctions and other mechanisms, not initial placement offerings. Several high-profile companies, such as Wimm-Bill-Dann, went public on foreign exchanges. Cosmetics company Kalina generated $25 million at its IPO in April. It was preceded by the largest-ever domestic IPO by Irkut, earning the jet maker $127 million in March.

By Simon Ostrovsky