April 13, 2017 Issue No. 2017/13

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1 SECURIITIIES MARKET NEWSLETTER weekly Presented by: VTB Bank, Custody April 13, 2017 Issue No. 2017/13 Company News PhosAgro s board of directors approves large financing deal On April 6, 2017 the board of directors of fertilizer producer PhosAgro approved a large financing deal. The board also confirmed the agenda for the annual general meeting of shareholders, which would take place on May 30 and consider related issues. UCP withdraws RUB 11.5 bln case versus Transneft over 2015 dividends On April 7, 2017 it was reported that the Moscow Arbitration Court closed a case under a suit of United Capital Partners (UCP) controlled by Ilya Shcherbovich seeking to contest oil pipeline monopoly Transneft s decision to pay over RUB 11.5 bln in dividends for The case was closed as UCP Industrial Holdings, a unit of UCP, withdrew its claim. In December, the Ninth Arbitration Court of Appeals closed a case by UCP Industrial Holdings seeking to recover around RUB 101 mln of Transneft s dividends for Bazanov appointed deputy CEO of Svyaz Bank On April 7, 2017 it was announced that Sergei Bazanov had been appointed deputy CEO of Svyaz Bank, a subsidiary of state development bank Vnesheconombank (VEB). Bazanov used to work in Svyaz Bank as COO and chief accountant and has 23 years of experience in banking. United Wagon Company notifies owners on preemptive rights On April 10, 2017 Russian rail car producer United Wagon Company notified owners who held shares as of December 29 of their pre-emptive right to buy 7.5 mln shares the company plans to offer publicly in Previously, a representative of the company stated that the date of the placement would be defined after state registration of the issue. The company s materials said that the board of directors would set the placement price on the basis of a market share of the securities but no less than the face value of one ruble. Shareholders are to bid for the shares in eight days since the announcement. United Wagon Company s major shareholders are United Wagon, owned by ICT Group Ltd, with a 25.05% stake, other strategic investors with a combined stake of 54.16%, and management of the company with 0.96%. The remaining 19.83% is free-float. VTB Bank s board approves reorganization of European units On April 10, 2017 it was stated that the supervisory board of Russia s second largest bank VTB approved reorganization of units in Austria, Germany and France. The board thinks it is reasonable to merge VTB Bank (Austria) AG with VTB Bank (Deutschland) AG, and to merge VTB Bank (Deutschland) AG with VTB Bank (Europe) SE further. Later VTB Bank (France) SA will be merged with VTB Bank (Europe) SE. According to the bank after the mergers, VTB will own at least 95% in VTB Bank (Europe) SE, and the remaining 5% may be converted into shares of other owners of VTB Bank (France) SA if it is necessary. Previously, VTB Bank CEO Andrei Kostin said that the bank would finish reorganization of its European affiliates and merge them under one license with headquarters in Frankfurt until the end of March The positive impact from the reorganization was estimated at about EUR 50 mln per year. In March, VTB Deputy CEO Yury Solovyov said the bank plans to close the French affiliate during

2 Novatek buys back 11,430 common shares on April 3-7, 2017 On April 10, 2017 it was announced that Russian independent gas producer Novatek bought back 11,430 common shares, including in the form of global depositary receipts (GDRs), from April 3 through April 7. Novatek announced USD 600 mln buyback program in June 2012 with possible prolongation. In May 2016, the company prolonged the buyback until June 7, VTB Registrar to become new registrar of RusHydro On April 11, 2017 it was reported that Russian hydropower giant RusHydro signed an agreement to maintain a share register with VTB Registrar, and plans to terminate relations with the current registrar R.O.S.T. Registrar on April 14. RusHydro s board of directors decided to terminate relations with R.O.S.T. Registrar on October 7, VTB Registrar won a public auction for the maintenance. Tatarstan buys 10.43% in AK BARS Bank from Svyazinvestneftekhim On April 12, 2017 it was announced that the Ministry of Land and Property Relations of the republic of Tatarstan bought 10.43% in local bank AK BARS, one of Russia s top 20 banks by assets, from state holding Svyazinvestneftekhim raising the stake in the bank to %. The deal was done on April 4, and the stake of Svyazinvestneftekhim in the bank decreased to 4.038% from %. Other details of the deal were not disclosed. Another major shareholder of AK BARS Bank is the state housing fund under the president of the republic of Tatarstan with a % stake as of January Transneft says no talks now to sell stake in NCSP On April 12, 2017 Maxim Grishanin, First Vice President of Russian oil pipeline monopoly Transneft, stated that the company was not currently holding talks over selling its stake in Novorossiysk Commercial Sea Port (NCSP). The relevant decision should be made by the government as the main shareholder of Transneft. Multi-industry Summa Group and Transneft currently own 50.1% in NCSP on a parity basis, and Transneft controls 10.5% more in the company on its own. The Federal State Property Management Agency owns 20% and affiliates of Russian Railways own 5.3%. The government plans to privatize the agency s stake in NCSP in Transneft CEO Nikolai Tokarev said earlier that three-four companies were interested in buying NCSP shares. Grishanin also said that after the sale of a stake NCSP Transneft could discuss a possibility to buy out Primorsk port, a part of NCSP, from its new owner. Alfa-Bank board approves participation in Roust s capital On April 12, 2017 the board of directors of Russia s Alfa-Bank approved participation in the charter capital of alcoholic beverage producer Roust belonging to Rustam Tariko. The New York court earlier approved the program of bond restructuring and capital increase of Roust. In January, Roust filed for bankruptcy to the New York court under U.S. Bankruptcy Code s chapter 11, which allows a debtor to continue owning property and conduct operations, but obliges it to provide a reorganization plan for approval of creditors. In November 2016, Roust said it reached a restructuring agreement with holders of two issues of its bonds, which would cut the group s debt by USD 462 mln and attract additional financing into shareholders equity. Official says Fosun, Polyus were to sign stake sale on April 12, 2017 On April 13, 2017 Igor Shuvalov, First Deputy Prime Minister, said that Chinese investment company Fosun Group was to buy a stake in Russian gold producer Polyus on April 12. In November 2016, Bloomberg reported that China s Zhaojin Mining Industry and Zijin Mining Group were discussing a purchase of a 25% stake in Polyus for USD 2 bln from the family of tycoon Suleiman Kerimov, and Zhaojin was studying the purchase jointly with Fosun. According to Shuvalov a Russian-Chinese commission on investments has met, and the two countries are working on several dozens of joint projects. In total, there are 73 projects on the list now. Dividends/coupons Russian Grids may exclude some investments from dividend base On April 6, 2017 Oksana Shatokhina, Deputy CEO for Economy at Energy grid operator Russian Grids, said that the company might exclude some investments from its dividend base and develop a new dividend calculation formula. Russia s Deputy Prime Minister Arkady Dvorkovich authorized the company to reconsider the dividend calculation rules. She added that 25% of the remaining non-adjusted net profit under the Russian Accounting Standards (RAS) would be paid in dividends. The issues will be discussed by the 2

3 board and directors and the general meeting of shareholders and a decision will be made until the end of April. Kazanorgsintez to pay RUB 5.07 per common share in 2016 dividends On April 7, 2017 shareholders of Russian petrochemical company Kazanorgsintez approved paying RUB per common share and RUB 0.25 per preferred share in dividends for The company paid RUB per common share and RUB 0.25 per preferred share in dividends for The net profit of Kazanorgsintez fell 5.7% to RUB 18.2 bln in Telecom-Management, a subsidiary of TAIF Group, holds 53.7% in Kazanorgsintez, AK BARS Bank holds 16.11%, and Svyazinvestneftekhim owns 10.55%. Inter RAO board recommends paying RUB 0.15 per share in 2016 dividends On April 7, 2017 the board of directors of Russian power holding Inter RAO recommended paying RUB per common share or a total of RUB bln, in dividends for In early March, the company s management said at least 25% of the International Financial Reporting Standards (IFRS) net profit might be paid in dividends for The IFRS net profit rose by 160% on the year to RUB 61.3 bln in FGC UES sees decision on state firms dividends in April 2017 On April 7, 2017 Andrei Murov, CEO of Russia s Federal Grid Company of Unified Energy Systems (FGC UES), said that the company expected that a discussion about state companies dividends would finish in April and would define the size of its dividend payment after that. There is a government ruling under which all (state companies) pay 25% (of net profit). The reminder is being discussed. Murov thinks that the discussion will finish in April. The company will pay in accordance with the decision made. If it is decided 50%, the company will pay 50%, if it is 25%, then the company will pay 25%. In 2016, Prime Minister Dmitry Medvedev signed a one-time ruling that a state company must take the highest figure of its net profit - under Russian Accounting Standards or International Financial Reporting Standards - and allocate no less than 50% of the net profit for 2015 dividends. The Finance Ministry wants to make the ruling permanent, while the Economic Development Ministry believes the size of dividends should be defined for each state company individually. Verkhnechonskneftegaz board recommends paying RUB 20 bln in 1Q dividens On April 10, 2017 the board of directors of Rosneft affiliate Verkhnechonskneftegaz recommended paying RUB per share or a total of RUB 20 bln, in dividends for January-March The record date is May 10. Verkhnechonskneftegaz paid RUB bln of undistributed profit of prior years in dividends for January-September In 2015, the company paid no dividends. Cherkizovo to pay RUB 600 mln in 2016 dividends On April 11, 2017 shareholders of Russian meat producer Cherkizovo approved payment of RUB mln, or RUB per share, in dividends for The shareholder register for dividends will be closed on May 1, The net profit of Cherkizovo fell about 67% to RUB 1.9 bln in 2016, as calculated under International Financial Reporting Standards (IFRS). According to media reports, Igor Babayev, the group s founder, and his family own 65% in Cherkizovo, and the remaining 35% is in free float. FGC UES plans no interim dividends in 2017 On April 12, 2017 Andrei Murov, chairman of the management board of Russia s Federal Grid Company of Unified Energy Systems (FGC UES), stated that the company did not plan to pay interim dividends in State-controlled power utility Russian Grids owns 80.13% in FGC UES, while the Federal State Property Management Agency owns 0.59%, and minorities own 19.28%. Sovcomflot board recommends paying RUB 6.1 bln in 2016 dividends On April 12, 2017 the board of directors of Russian shipping company Sovcomflot recommended paying RUB bln, or 50% of its net profit under International Financial Reporting Standards (IFRS), in dividends for The company paid RUB 6.2 bln, or 25% of IFRS net profit, in dividends for The Russian government holds 100% in Sovcomflot. Transneft management to offer 25% of net profit in 2016 dividends On April 12, 2017 Maxim Grishanin, First Vice President of Russian oil pipeline monopoly Transneft, stated that the company s management would offer to allocate 25% of the company s net profit in dividends for The board of directors earlier approved a dividend policy stipulating payment of 25% of the net profit in 3

4 dividends. The Federal State Property Management Agency changed the company s charter in March, making it pay no less per preferred share than per common share in dividends. The Finance Ministry earlier offered to make all state-run companies pay 50% of their net profit in dividends for The Russian government will decide on the size of Transneft s dividends in May. MTS board recommends paying RUB 31.2 bln in 2016 dividends On April 12, 2017 the board of directors of Russian mobile operator MTS recommended paying RUB bln, or RUB 15.6 per common share, in dividends for The payment per American depositary receipt (ADR) is proposed at RUB The operator paid RUB bln in dividends for January-June 2016, or RUB per common share. For 2015, MTS paid RUB 28 bln in dividends, or RUB per common share and RUB per ADR. For January-June 2015, the company paid RUB 11.6 bln, or RUB 5.61 per common share. Multi-industry holding Sistema owns 48.94% in MTS capital, and 48.88% are in free float. Uralkali board recommends paying no dividends for 2016 On April 12, 2017 the board of directors of Russian fertilizer producer Uralkali recommended paying no dividends for The company s net profit more than doubled to RUB bln in 2016, as calculated under Russian Accounting Standards (RAS) and soared to USD bln in 2016 from USD 184 mln in 2015 under International Financial Reporting Standards (IFRS). Uralkali has not paid dividends since Businessman Dmitry Mazepin holds 19.9% in Uralkali through UralChem and Belarusian businessman Dmitry Lobyak has a 20% stake. Globaltrans to receive RUB 6 bln in dividends from unit On April 12, 2017 it was announced that New Forwarding Company, a 100% subsidiary of Russian rail cargo operator Globaltrans, would pay about RUB 6 bln in dividends to the parent company. The company did not announce dividends in 2015 and Russia yet to decide on state companies dividends On April 13, 2017 Igor Shuvalov, First Deputy Prime Minister, stated that the Russian government has not yet made a final decision on company dividends, but aims at the maximum payment of 50% of a net profit unless a company has a serious reason for a smaller payment. The government will work out proposals thoroughly and submit them to President Vladimir Putin. In 2016, Prime Minister Dmitry Medvedev signed a one-time ruling that a state company must take the highest figure of its net profit - under Russian Accounting Standards or International Financial Reporting Standards - and allocate no less than 50% of the net profit for 2015 dividends. The Finance Ministry wants to make the ruling permanent. Gazprom executives offer to pay RUB 7.89 per share in 2016 dividends On April 13, 2017 the executive board of Gazprom has recommended the board of directors to approve paying RUB 7.89 per share in dividends for The shareholders will consider the recommendation at an annual general meeting scheduled for June 30. If the decision is upheld, the amount of dividends will remain on the level of Gazprom keeps on following a policy aimed at retention of the dividend amount on the level no lower than the company has already attained. Eurobonds / DRs Russia may offer Eurobonds in May-June 2017 On April 7, 2017 Konstantin Vyshkovsky, director of the Finance Ministry s state debt and state financial assets department, stated that Russia plans to offer Eurobonds in May-June. The Russian budget envisages placement of up to USD 7 bln Eurobonds in The Finance Ministry said earlier it planned to offer USD 3 bln worth of new securities and to swap USD 4 bln worth of the securities in circulation for new issues. X5 Retail places RUB 20 bln Eurobonds at 9.25% On April 11, 2017 X5 Retail placed RUB 20 bln 3-year Eurobonds with a coupon rate of 9.25%. The initial coupon guidance stood at 9.5%, it was later lowered to %. Demand has exceeded RUB 30 bln. Andrei Solovyov, head of the debt capital market department at VTB Capital, one of the placement s organizers, said that Russian investors bought 80% of the company s Eurobonds. Around 20% of the issue was purchased by foreigners, including investors from Switzerland, the U.K. and Continental Europe. The company held a road show on April 5-7 in Russia and Europe. Goldman Sachs and UBS also acted as the organizers. 4

5 Metalloinvest to roadshow 7-year dollar Eurobonds from April 14, 2017 On April 13, 2017 a banking source stated that Russian metals holding Metalloinvest plans to roadshow 7- year U.S. dollar denominated Eurobonds starting from April 14 in Russia, Europe and the U.S. Credit Suisse, Sberbank CIB, VTB Capital, Bank of America Merrill Lynch, and ING will organize meetings with investors and the possible placement. The company also appointed Credit Suisse, Sberbank CIB, VTB Capital, Bank of America Merrill Lynch, ING, and SG CIB as organizers of USD 1 bln issue of the company s Eurobonds that mature in Metalloinvest said in a statement the company plans to buy back up to USD 1 bln of 7- year Eurobonds placed in April 2013 at 5.625% annually. The buyback price is set at USD 1,065 per security. The company will collect the bids until April 24. Please be advised that the information presented in this newsletter is based on the following sources: National Settlement Depository (NSD); Clearstream Banking; Euroclear Bank; PRIME-TASS information agency; Kommersant, "Rossiyskaya Gazeta, Izvestiya, "Vedomosti, The Moscow Times newspapers, and others. For more information kindly contact: Anna Enfiandzhiants Evgenia Sakr Julia Dombrovskaya T +7 (495) T +7 (495) T +7 (495) F +7 (495) F +7 (495) F +7 (495) E anna.enfiandzhiants@msk.vtb.ru E evgenia.sakr@msk.vtb.ru E julia.dombrovskaya@msk.vtb.ru This document has been prepared exclusively for internal use of VTB Bank (PJSC) customers. The information should not be further distributed or duplicated in whole or in part by any means without the prior written consent of VTB Bank (PJSC). The information contained herein has been prepared on the basis of information which is either publicly available or obtained from a source which VTB Bank (PJSC) believes to be reliable at the time of publication. Information provided herein may be a summary or translation. The content of the material contained herein is subject to change without notice, and such changes could affect its validity. VTB Bank (PJSC) is not obligated to update the material in light of future events. Furthermore, VTB Bank (PJSC) does not warrant, expressly or implicitly, its veracity, accuracy or completeness. VTB Bank (PJSC) and its affiliates accept no liability whatsoever for any use of this communication or any action taken based on or arising from the material contained herein. Additional information may be available upon request. The material in this communication is for information purposes only. Therefore, this communication should not be interpreted as investment, tax or legal advice by VTB Bank (PJSC) or any of its officers, directors, employees or agents and customers should consult with appropriate professional advisers for these specific matters. Nothing expressed or implied herein is intended to create any obligation of VTB Bank (PJSC) and/or impose any liability on VTB Bank (PJSC) and/or create legal relations between VTB Bank (PJSC) and VTB Bank (PJSC) customers. 5