Globaltrans Investment, Russia’s largest private rail freight operator, is to buy a controlling stake in rival BaltTransServis for $250 million to boost its presence in the oil transport market.
Globaltrans said Tuesday that it would partially fund the deal by raising $175 million in a placement of Global Depositary Receipts, with $75 million going toward the acquisition.
Its shares rose 6.9 percent to close at $9.10 a share Tuesday.
Chief executive Sergei Maltsev said the remaining $100 million would go toward expanding the company, particularly through the acquisition of new rolling stock.
“This is the right time to increase our rail fleet. Russian freight volumes are gradually recovering, while prices for rolling stock are at the bottom of the market,” he said.
“We are buying BTS to improve our standing in the oil sector. It’s a very stable business and a stable market,” Maltsev said.
Maltsev said demand was yet to reach precrisis levels, but it had picked up significantly since March and was likely to remain stable until at least the end of March.
“We do not foresee any change for Q1 2010 from current levels. … There is [normally] a reduction of volume in the winter months, so if winter compares well to autumn, this is a very good message,” he said.
The placement will comprise about $100 million of newly issued ordinary shares in the form of GDRs and the sale of a further $75 million in GDRs by Transportation Investments Holding, the controlling shareholder of Globaltrans.
The GDR placement will be coordinated by Deutsche Bank and Morgan Stanley, while VTB will also act as a joint bookrunner.