Vedomosti, April 4, 2002

Prior to the IPO, RBC Information Systems published some data its prospectus that may seem confusing to investors. It states that the company's assets total only 84,000 rubles (about $2,695) and its obligations amount to $5m. RBC's shareholders assured the Vedomosti newspaper that the company's turnover and assets amounted to millions of dollars, which would be stated in the prospectus drawn up by international standards.

The holding OAO RBC Information Systems owns 100-percent stakes in ZAO RosBusinessConsulting, RBC Holding, RBC Soft, RBC Center and RosBusinessConsulting publishing house. It is subsidiaries of OAO RBC Information Systems that run all the business: 48.1 percent of revenues come from RBC's media business, 49.4 percent come from software and system integration solutions. The company is owned by six people; three of them - German Kaplun, Alexander Morgulchik and Dmitry Belik - own a 31.23-percent stake each.

The Russian stock market saw the first IPO this month. The pioneer was RosBusinessConsulting, engaged in information technologies, software solutions and providing financial and business information. Its most famous project is a business news line on the Internet.

OAO RBC Information Systems is expecting to sell 16m shares on the domestic MICEX and RTS exchanges, which will make up 16 percent of the company's joint-stock capital after the IPO. The underwriter of the issue is Aton capital group.

According to the prospectus, which was placed on the RBC web site, after the IPO, the company will still have another 5m shares, which can be floated by a corresponding decision of the board of directors. However, it is difficult to estimate the financial status of the issuer by this prospectus: assets of OAO RBC Information Systems amount to only 84,000 rubles (about $2,695) and it does not run any economic activities. The prospectus says that all businesses of this holding are concentrated in other firms owned by the issuer. In addition, financial obligations of OAO RBC Information Systems total $5m.

In December 2001 RBC Investments (Cyprus) Ltd. floated guaranteed bonds worth $5m. According to the prospectus, owners of these bonds will be able to convert their securities into RBC shares at a 10-percent lower price than at the IPO. German Kaplun, chairman of the RBC board of directors, reported in an interview with the Vedomosti newspaper that no additional issues of shares were planned and shares would be provided by the current shareholders.

Using the method of discounting payments flow, Aton capital group estimated RBC at $82m and at $125m (i.e. almost 50 percent more) by comparing it with similar western companies. "It is an ordinary practice for a Russian company to trade with such a discount as compared to western counterparts. That is why we think that the results of both methods coincide," the Aton's survey says. In other words, one share of RBC was estimated by the underwriter, whose commission will make up 6 percent of the transaction, at $0.82. This means that owners of RBC Investments bonds will be able to convert their bonds worth $5m into RBC shares at $0.75 per share and receive a 6.7-percent stake in the company.

However, Kaplun is sure that owners of the bonds may not want to convert their securities. In any case, they will be able to convert their bonds into shares until December 2004, when the bonds are to be redeemed. Kaplun assured us that the company would be able to meet its obligations: RBC's revenues are expected to reach $26m this year and its net profit is forecasted to hit $9m.

COMMENTARIES OF THE COMPANY'S OWNER

German Kaplun, the chairman of the RBC board of directors and one of the largest shareholders of RBC Information Systems.

Q: It is clear from the prospectus that you are trying to float shares of a company, whose assets make up 84,000 rubles (about $2,695). Why publish the nominal cost of assets and not their real cost? - to shy away investors?

A: In addition to the prospectus registered by the Russian Federal Securities Commission, on Monday we will publish a prospectus that meets western standards. This document is much larger and it answers more questions. The turnover of the RBC group (without reciprocal turnovers) totaled $17m in 2001. The net profit reached $6.3m and EBITDA was $7.7m.

Q: Will you or other shareholders buy shares at the IPO?

A: No, under no circumstances. At the beginning, we were going to float 12 percent of shares but then we decided to float 16 percent. We wanted to provide market liquidity. That is why we are not taking part in purchasing shares.

Q: Could you tell us about the plans for the creation of a business news television, on which you are going to spend 40 percent of the IPO revenues?

A: I cannot comment on this project until it is approved by the board of directors.

Nikolay Mazurin
Yury Granovksy