Tag Archives: business

IMF approves loans for Kyrgyzstan and Armenia

JUNE 16/17 2016 (The Conway Bulletin) – The IMF approved two loans to Armenia and Kyrgyzstan, part of a three-year plan to support macroeconomic reforms. It loaned $22m to Armenia, where it supported a controversial tax reform that received a first parliamentary approval on June 15. The IMF also gave a $13m loan to Kyrgyzstan and lauded the government’s measures to boost tax revenues and cut spending.

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

Uzbekistan to launch tunnel

JUNE 20 2016 (The Conway Bulletin) – The Uzbek government said it will launch the Angren-Pap railway service from July, opening the longest tunnel in Central Asia. The project, completed in the past few months, cost $1.6b and was partly funded by Chinese and World Bank loans. Uzbek President Islam Karimov and his Chinese counterpart Xi Jinping inaugurated the new tunnel during a ceremony in Tashkent.

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

EBRD issues lari bond in Georgia

JUNE 17 2016 (The Conway Bulletin) – The EBRD said it issued a 107m lari ($50.2m) bond in Georgia, the second lari-denominated public bond issued by the bank. The five-year bond has an initial yield of 6.45% and will be listed on the Georgian Stock Exchange. The EBRD launched its first domestic bond in Georgia in March 2014. The value of the original two-year bond was 50m lari (around $30m at the time).

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

Gazprom agrees Georgia deal

JUNE 17 2016 (The Conway Bulletin) – Russia’s state-owned energy company Gazprom said it agreed a gas supply deal with a private Georgian distributor, Gasko+, stirring criticism in Georgia’s Parliament. Under the deal, agreed on the sidelines of the St Petersburg International Economic Forum, Gazprom will sell 100m cubic metres/year to Gasko+. Georgian MPs have said that the deal risks circumventing the current intergovernmental agreement that allows Georgia to import 10% of the gas Russia sends to Armenia through its territory.

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

Chaarat receives extension from Kyrgyz government

JUNE 21 2016 (The Conway Bulletin) – British Virgin Island-registered Chaarat Gold said it received a two- year extension from the Kyrgyz government to present results for a gold mine it is exploring in north-west Kyrgyzstan. Now, Chaarat has to present a detailed development proposal for the mine by the end of 2018. The company completed a feasibility study for the mine, Chaarat’s only asset, in February.

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

Kyrgyzaltyn changes board composition

JUNE 17 2016 (The Conway Bulletin) – Kyrgyz state-owned miner Kyrgyzaltyn said in a note that it had changed the composition of its board. Askar Oskombayev, adviser to the PM, will now serve as chairman, replacing Duishenbek Kamchybekov. Kyrgyzaltyn owns 32% of Canada’s Centerra Gold, which owns and operates the Kumtor gold mine in eastern Kyrgyzstan. Centerra and the government are currently embroiled in a legal battle to resolve disputes over ownership of the gold mine.

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

BGEO buys major Georgian utilities company

TBILISI, JUNE 23 2016 (The Conway Bulletin) — BGEO, a London-listed holding company that owns Bank of Georgia, said it bought the 75% stake it didn’t already own in Georgian Global Utilities which controls some of the country’s biggest utility companies.

Offshore-registered Georgian Global Utilities (GGU), owns water and wastewater service providers in Tbilisi, Rustavi and Mtskheta and three hydropower generation facilities with a total capacity of 143MW. The purchase gives BGEO control over water and wastewater services for a third of the population.

In 2014, BGEO bought a 25% stake in GGU for $26.25m. It delayed buying another stake in GGU because of the uncertain position of the Georgian currency, the lari.

Now, with the new management brought in after the 2014 deal, BGEO said that GGU had improved its position and the lari currency had stabilised after losing 25% of its value.

“The combination of GGU’s strong performance during 2015 and the prospect of significant further improvement over the medium term led the BGEO board of directors to make the decision to step up the Group’s investment in GGU,” BGEO said in a statement.

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

Irakli Gilauri, brother of former PM Nika Gilauri, is BGEO’s CEO.

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.

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(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.

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(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.

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