Vedomosti (Moscow), September 8, 2005

Requiring $150m

RosBusinessConsulting (RBC), a media holding, seems to be contemplating new acquisitions. The company's board of directors has resolved to raise the number of authorized shares, gearing up for prospective asset acquisition. The additional share issue reserve will come up to $150m.

RBC made its first IPO in Russia in April 2002. Then, it floated 16 percent of its share on the RTS and MICEX, to raise $13.28m. In 2004, RBC's turnover stood at $ 75.1m, and net profit was reported at $10.9m. RBC owns a news agency, a web-portal and RBC-TV business television. At this point, 36.1 percent of RBC's shares are free-float, while the rest belongs to the management team. As yesterday's trade closed on the RTS, RBC's capitalization stood at $591m.

As RBC said yesterday, on September 2, the company's Board decided to raise the number of authorized shares by 15m to a total of 34.26m shares (around 30 percent of the company's authorized capital). Of these 15m shares, 4.26m are to be allotted for RBC's option program worked out by the Board and approved on June 22. RBC's press release highlighted that the company required the reserve of the remaining 30m shares to facilitate prompt decisions in the routine course of business and acquire new assets.

The extraordinary shareholders' meeting scheduled for October 14 is expected to finally fix the number of authorized shares. That said, RBC is still in no hurry to specify its plans. According to German Kaplun, RBC's Chairman of the Board of Directors, this is in no way linked to the acquisition of two IT companies, which is to be completed soon. Experts seem somewhat worried about that. Svetlana Sukhanova, analyst at Alfa-Bank, pointed out that any additional share issue was sure to render the company's value for current shareholders vague, and it would be uncertain as to what they would gain instead.

Yandex General Director Arkady Volozh believes that the shares RBC has reserved to attract funds on exchanges is quite relevant. He added that the company was unlikely to need such a sum to acquire small IT companies, yet he believes it should be taken into account that RBC is also operating in other spheres, such as television. A sum worth $150m is quite a considerable stake for Russia's media market, Rambler's General Director Irina Gofman said. Even more so for the Russian web, the Runet, she admitted. "Yet, the main thing is not how much you spend, but what and how you buy," Gofman added.

Elena Bazhenova, analyst at Aton Capital, suggested that RBC might float a part of the shares as an additional issue, as the company was projecting a deal with Mostelecom whose network covers the whole of Moscow's television audience. RBC earlier divulged that to conclude the deal, it would require around $40m, and it expected to settle the issue before the end of this year.

However, yesterday, General Director of RBC Yury Rovensky explained in an interview with Vedomosti that the company had reached an agreement in principle for the broadcasting of RBC-TV's programs via its channels. He elaborated that the $40m did not imply payment for getting connected to Mostelecom's resources. "RBC is set to reach out only to Moscow's districts we select first. The process is tricky from a technical standpoint, because Mostelecom's capacity is now being used to the full," Rovensky observed.

Svetlana Vitkovskaya, Roman Dorokhov