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GM- Uzbekistan woes worsen

JUNE 23 2016 (The Conway Bulletin) – Rustam Radjabov, the new director of the GM-Uzbekistan joint venture, was detained by police and held in jail since the end of May on embezzlement charges, RFE/RL reported quoting sources in the company. Mr Radjabov replaced Tokhirjon Jalilov who was arrested in April for masterminding a criminal scheme over car exports to Russia. The Uzbek authorities have not confirmed the arrest. The anonymous source also said operations at the GM Uzbekistan plant are “practically suspended.” GM Uzbekistan is one of the country’s most important factories.

ENDS

(News report from Issue No. 286, published on June 24 2016)

Kazakhstan’s Kazmunaigas wants to gain more control of KMG EP

ALMATY, JUNE 17 2016 (The Conway Bulletin) — Kazmunaigas, Kazakhstan’s state-owned energy company, said it wants to change the shareholder’s agreement at its London-listed subsidiary KMG EP, a move that independent directors said would weaken the company.

Kazmunaigas, which owns 57.9% of KMG EP, released a note that called for an extraordinary general meeting in August, that would change the terms in the so-called relationship agreement, a document that was prepared in 2006, when KMG EP listed its global depository receipts in London.

Analysts have said that Kazmunaigas, which has been hit by low oil prices, may be looking to gain more control of KMG EP, which has performed better than its state-owned parent. By securing more shares and improved terms, Kazmunaigas would also strengthen its position ahead of a prospective IPO in the next few years.

But independent directors at KMG EP immediately lined up to voice their concerns about Kazmunaigas’ plans. They also said that they would resign if they were passed.

“[We] strongly recommend that all Independent Shareholders vote against the Resolutions proposed by NC KMG,” three of the four independent directors on the board of KMG EP said in a joint statement.

The directors also said the new document will “significantly weaken” independent voices in the company’s decision-making processes and the Kazmunaigas offer of $7.88/GDR to minority shareholders “significantly undervalues” KMG EP.

Kazmunaigas said a new deal would improve efficiencies at KMG EP.

And the row looks to be getting more bitter. Kazmunaigas chairman Sauat Mynbayev also said the KMG EP share price could fall by one-third to around $5/GDR if investors didn’t go along with the plan.

“I don’t think the stock price will jump, in fact, if the shareholders decide to go against our plan, it could fall to, say $5/share,” he said.

In effect, the government sent a strong signal to shareholders that it wants to increase control over KMG EP.

If shareholders choose to go against the plan, a bitter battle for control looms.

ENDS

(News report from Issue No. 286, published on June 24 2016)

Stock market: KMG EP

JUNE 23 2016 (The Conway Bulletin) – The price of KMG EP’s global depository receipts (GDRs) in London has not moved much in the past week, despite the dispute between its owner, Kazakhstan’s Kazmunaigas, and its independent directors.

KMG EP is the upstream branch of the Kazakh state-owned oil and gas company. It listed its GDRs in London after an IPO in 2006. The closing price on Thursday was $7.24/GDR, which follows a trend that since mid- May has pushed KMG EP’s GDRs above the $7 benchmark.

Despite low oil prices and decreasing export volumes, KMG EP has managed to perform well in the first quarter of the year, due to the sharp depreciation of the tenge against the US dollar. A weaker tenge helped KMG EP offset domestic costs and increase the value of its exports, denominated in US dollars, despite the plunge in global prices.

ENDS

(News report from Issue No. 286, published on June 24 2016)

Armenians criticise tax revamp

JUNE 22 2016 (The Conway Bulletin) – Political and institutional figures have harshly criticised a new tax code that parliament approved last week during the first reading of the bill. Mans Tandilyan, a high-ranking member of the Lusavor Hayastan party, said the new code will negatively affect small and medium businesses. Tigran Jrbashyan, president of the American Chamber of Commerce in Armenia, warned that, if passed, the law would send Armenia into a recession. The new tax law, approved on June 15, will increase excise taxes on fuel, tobacco and alcohol and increase income tax.

ENDS

(News report from Issue No. 286, published on June 24 2016)

McDonald’s finally opens in Kazakh city

ALMATY, JUNE 10 2016 (The Conway Bulletin) — To much excitement, and a little controversy, McDonald’s opened its first restaurant in Almaty, Kazakhstan’s biggest city.

This is the second McDonald’s in Kazakhstan after a restaurant it opened in Astana in March.

At the opening on the site of an old cinema which heritage activists had campaigned to try and protect, Kairat Boranbayev, owner of the McDonald’s franchise in Kazakhstan and Belarus, said that the company aimed to build a total of 15 stores in Almaty and 10 in Astana.

The long-awaited opening of the McDonald’s restaurants has been one of the few positives for President Nursultan Nazarbayev this year, marked by a sharp drop in Kazakhstan’s economic outlook because of a recession in Russia and a fall in oil prices. Ordinary Kazakhs have seen inflation rise, jobs disappear and tenge savings wiped out.

ENDS

(News report from Issue No. 285, published on June 17 2016)

Kazakhstan’s oil output falls

JUNE 13 2016 (The Conway Bulletin) – Kazakhstan’s oil output fell by 7% to 1.5m barrels/day in April compared to the same period in 2015, the Organisation of Petroleum Exporting Countries (OPEC) said in a monthly report. Kazakhstan’s Statistics Committee said total oil production shrank by 2.8% in Jan.-May 2016, to 27.7m tonnes, compared to the same period in 2015.

ENDS

(News report from Issue No. 285, published on June 17 2016)

Azerbaijan’s Pasha issues Eurobond

JUNE 16 2016 (The Conway Bulletin) – Pasha Bank, one of the largest banks in Azerbaijan, said it will launch a $200m Eurobond issue in the second half of the year. The bank expects yields of around 5%, Ivan Uglyanitsa, head of investment banking, told Reuters. Azerbaijan’s sovereign debt gives a yield of around 3.5% currently.

ENDS

(News report from Issue No. 285, published on June 17 2016)

Polymetal gets loan for its Kazakh project

JUNE 15 2016 (The Conway Bulletin) – Russian miner Polymetal said it reached an agreement with Sberbank for a $350m loan to finance the start-up of its Kyzyl project in north-eastern Kazakhstan. In 2015, it bought the Kyzyl project for $620m from Sumeru, a private group owned by Timur Kulibayev, son-in-law of Kazakh President Nursultan Nazarbayev.

ENDS

(News report from Issue No. 285, published on June 17 2016)

Foreign trade rises in Georgia

JUNE 13 2016 (The Conway Bulletin) – Foreign trade turnover grew by 3% in Georgia in Jan.-May 2016 compared to the same period last year, the Statistics Committee said. Importantly, however, the gap between imports and exports grew by 15%, worsening the country’s trade balance. The value of imports increased by 8% to $3.3b. The value of exports decreased 12%, to $780m.

ENDS

(News report from Issue No. 285, published on June 17 2016)

Georgian anti-LGBT activists want referendum on blocking gay marriages

TBILISI, JUNE 12 2016 (The Conway Bulletin) — Georgia’s Central Election Committee (CEC) gave preliminary approval for a referendum on enshrining the sanctity of marriage between a man and a woman in the Georgian Constitution, setting up a potentially acrimonious clash between liberals and conservatives.

If activists manage to collect the 200,000 signatures needed to trigger a referendum it is likely that the vote would be held on the same day as a parliamentary election — Oct. 8.

It’ll be closely watched by the European Union. Georgia wants to join the European Union and has been lobbying for visa-free access but, among other issues, Brussels has said that Georgia’s attitude towards gay rights undermines its application.

Georgia’s society is broadly conservative and against gay rights, although it does have a vocal LGBT community. In 2013, a crowd attacked a gay rights march in Tbilisi injuring several people. A Georgian Orthodox priest was photographed wielding a stool as a weapon.

The proposed referendum was put forward by several MPs, including Sandro Bregadze, who had been a deputy minister within the Georgian Dream coalition and is known for his staunchly homophobic comments.

He told a press conference after the CEC approval that the referendum question he wants to put forward is: “Do you agree or not the definition of marriage is a union between a man and a woman for the purpose of starting a family?”

Lika Jalagania, lawyer at Human Rights Education and Monitoring Center, later told The Conway Bulletin that there was a strong chance that the group lobbying for the referendum would be able to collect the 200,000 signatures.

“I really think that they will reach this number, bearing in mind the current homophobic attitudes of Georgian society”, she said.

On June 13, outside the US embassy in Tbilisi a group of gay rights campaigners were holding a vigil in support of the victims of a homophobic attack on a nightclub in Orlando two days earlier. At least 49 people died in the attack, one of the worst mass shootings in the US.

A 57-year-old activist who declined to be named said that mainstream Georgians’ attitude towards the LGBT community would not change.

“The Church rules our country and that is not good for us,” she said.

ENDS

(News report from Issue No. 285, published on June 17 2016)