05 February 2003 15:35
RUSSIA: BETTER LATE THAN NEVER FOR PHARMACY IPO
Pharmacy chain 36.6 had good news and bad news on 30 January, announcing that its delayed initial public offering
(IPO) finally took place but garnered substantially less than what the company had hoped for. The company allocated 1.6
million shares (20 percent) at $9 per share, RBK reported on 31 January, raising only $14.4 million instead of the $17
million-$25 million it had wanted. The drugstore chain -- which includes more than 50 outlets in the Moscow region and
three production facilities -- canceled its 23 January IPO the night before the big event amid rumors of slack demand
and complaints of poor preparation (see "RFE/RL Business Watch," 28 January 2003). RBK termed the eventual
offering "in essence, a private placement" to a small group of private investors who will subsequently trade
the shares on the Moscow Interbank Currency Exchange. Ironically, one of the factors that put investors on guard -- the
chain's announcement that proceeds from the offering will go to pay off debts -- likely made the offering
inevitable. Troika Dialog analyst Andrei Ivanov told "Kommersant" on 31 January that "the offering was
the company's only chance to get funds, since they've exhausted all other options of attracting
financing." "Konservator" reported on 31 January that the company's debt stood at $35.5 million in
December, with $10.5 million in payments due in the first quarter of 2003. Summing up the outcome, Renaissance Capital
analyst Natalya Zagvozdina told "Vedomosti" on 30 January, "I feel that $9 per share is close to a fair
price; given the situation, they made the best decision [in going ahead with the offering]." DK Copyright (c) 2003.
RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty
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