Daily analyst comments

Sovcomflot has reminded Novoship shareholders about their right to present their common shares under a buyout offer at a price of RUB 81.82 (USD 2.99) per share. The shareholders gained this right after Sovcomflot amassed 95% of Novoship common shares. The respective information was released on May 22 (see our daily analytical commentary: Sovcomflot plans to consolidate 100% of common shares in Novoship).

Under Russian laws on joint stock companies, once an investor consolidates over 95% of common shares in a company, its minority shareholders are entitled to request the buyout of their shares by the majority shareholder at a price no lower than the average weighted price of the shares in the six months prior to the deal. In this case, the buyout price of RUB 81.82 (USD 2.99) per share is on a par with the price at which the state-owned shares in Novoship were added to Sovcomflot’s charter capital, and the average weighted price for the shares was lower in the six preceding months.

We recommend that shareholders take advantage of this buyout offer from Sovcomflot. To begin with, the company’s shares have not been traded on RTS since October 16, 2008, meaning that the sale of the shares to Sovcomflot represents practically the only opportunity for most minority shareholders to sell their shares at an acceptable price. To add to this, price trends on the stock markets have drastically changed, with the RTS index shedding more than 70% of its value since May 23, 2008. Finally, conditions on the freight market have also markedly deteriorated over the past six months.