2009 - CRE

36
Cover Story:
Placed­under­pledge
Despite­ forecasts­ on­ the­ situation­ ofmergers­
and­ acquisitions­ by­ KPMG­ Global­
M&A­Predictor,­it­is­already­clear­that­therewon’t­be­a­drop­in­the­number­of­M&As­inthe­
second­ and­ third­ quarters­ of­ 2009­ toits­lowest­possible­level.­According­to­datafrom­
M&A-Intelligence,­ the­ developmentindustry­in­2006­saw­some­24­transactionsworth­
$1.682­ billion,­ in­ 2007­ –­ 29transactions­worth­$3.234­billion,­in­2008­–­33­transactions­worth­$3.530­billion­whichrepresented­4.5%­of­the­overall­number­oftransactions.
In­Russia,­in­January­2009,­there­were­
47­ public­ mergers­ and­ acquisitions.­ “Wecan­
be­ certain­ that­ since­ last­ Novemberand­until­February­2009,­there­were­at­leastten­
finalized­ or­ announced­ M&As­ on­ thecommercial­real­estate­market,”­says­Elena­
Stepanova,­ senior­ attorney,­ Capital­ Legal­
Services.
A­catalyst­on­the­M&A­market,­accordingto­Elena­Stepanova,­was­the­economic­crisiswhich­
evolved­ even­ deeper­ in­ 2009­ andwhich­triggered­a­lack­of­internal­and­debtcapital­within­many­companies,­especiallyamongst­those­working­in­the­constructionindustry.­
Such­ circumstances­ amongst­ anumber­of­companies­created­an­inevitableneed­for­the­identification­of­new­sources­offunding­for­the­realization­of­their­projects.­One­of­the­simplest­and­most­widely­spreadmethod­
for­ raising­ additional­ resources­ isthe­sale­of­one’s­own­assets­whose­clearanceprovides­
the­ possibility­ of­ preserving­ afinancial­balance.
“It­ is­ somewhat­ indicative­ that­ thenumber­
of­ M&A­ transactions­ in­ Europe­ inthe­first­two­months­of­2009­surpassed­theoverall­
number­ of­ such­ transactions­ forthe­
whole­ of­ 2008,”­ says­ Anna­ Shiryaeva,director­general­of­Magazin­Magazinov,­inassociation­with­CB­Richard­Ellis.­“It­is­notsurprising­that­companies­upon­companiesare­joining­temporary­alliances­in­order­tosurvive­under­these­crisis­conditions­and­todecrease­expenditure.­The­commercial­realestate­
and­ retail­ industries­ have­ becomeone­of­the­main­gauges­of­the­M&A­market
Marriage of Convenience
author:­Tatiana­Demidova
...............................
photography:­Archive­CRE
­ “I’ll­get­married­for­the­duration­of­the­crisis.­Good­personality,descent­cook,­no­headaches…”­The­new­joke­best­illustrates­the­situationon­the­M&A­market.­In­Europe,­the­number­of­mergers­and­acquisitionsin­the­first­two­months­of­2009­has­surpassed­the­overall­number­of­suchtransactions­for­the­whole­of­2008.­Market­experts­are­forecasting­anincrease­in­the­number­of­misalliances­amongst­Russian­companies­as­well.
and­ demonstrate­ a­ wide­ geography­ oftransactions.­Mergers­and­acquisitions­havehad­an­impact­on­just­about­everyone:­fromthe­
major­ investment­ funds­ (Immofinanzand­Immoeast)­to­regional­Russian­players­
(ChudoDOM­ and­ Yuterra).­ And­ we­ haven’tseen­the­best­yet;­they­are­being­discussedand­appraised­everywhere.”
For­ instance,­ the­ widely­ discussedpossible­
sale­ by­ Oleg­ Deripaska,­ chairmanof­the­supervisory­board,­Basic­Element,­ofan­
equity­ stake­ in­ the­ Austrian­ company­
Strabag­ SE.­ It­ is­ presumed­ that­ Deripaskamay­cede­his­portion­of­25%­plus­one­shareto­
the­ banks,­ in­ case­ he­ doesn’t­ identifythe­
required­ resources­ to­ pay­ off­ his­ loanobligations.­
Let's­ remember­ that­ last­ fall­
Deripaska­ was­ already­ forced­ to­ refinancethe­purchase­of­the­Strabag­SE­equity­share,which­took­place­through­the­assistance­ofthe­London­branch­of­Deutsche­Bank.­At­the
M&A Transactions
time,­the­indispensable­sum­of­460­millioneuro­was­fuelled­by­Austrian­banks,­headedby­Raiffeisen­Zentralbank.The­investment­sub-division­of­Alfa­Groupshowed­an­interest­in­the­M.video­and­Tehnosilachains.­
As­ reported­ by­ the­ press­ secretaryof­
M.video,­ Nadejda­ Kiseleva,­ the­ companyreceived­
a­ letter­ last­ December­ from­ Alfa­
Group­with­a­proposition­“regarding­­possiblecooperation”.­
The­ cooperation­ implied­ thepurchase­of­at­least­25%­of­the­holding­ofone­of­the­chains.­As­specified­by­the­Press­Service,­negotiations­for­this­transaction­werenot­held.­However,­the­crisis­has­just­begunand­it­cannot­be­ruled­out­that­complicationswith­
regard­ to­ debts­ will­ force­ consumerelectronic­retailers­to­pay­special­attention­tosuch­propositions­for­cooperation.
Out­ of­ the­ latest­ transactions­ in­ theretail­
industry,­ it­ is­ worth­ noting­ thepurchase­by­PPF­Group­at­the­beginning­of­
February­of­a­51%­equity­share­of­Eldorado.­
As­ reported­ by­ Alexei­ Bekhtin,­ presssecretary­at­PPF­Group,­“the­parties­agreedupon­
the­ principals­ for­ the­ managementof­a­joint­enterprise.­Upon­the­creation­ofa­joint­enterprise,­PPF­Group­converted­asubstantial­share­of­the­previously­granted­Eldorado­loans­into­a­portion­in­the­sharecapital.”­
In­ September­ 2008,­ PPF­ Groupprovided­
the­ retailer­ with­ a­ loan­ to­ theamount­of­$500­million­under­a­collateralof­
51%­ of­ its­ shares.­ According­ to­ theagreement,­
the­ creditor­ had­ the­ right­ torevoke­
the­ loan­ or­ to­ convert­ it­ into­ an­
Eldorado­controlling­share­package.
In­ February,­ Banana-mama­ transferredmost­of­its­assets­to­Alfa­Bank­in­order­toclear­
its­ $30­ million­ loan.­ Three­ monthsearlier,­in­November­2008,­the­fourth­largest­
Russian­ cellular­ phone­ retailer­ Dixis,­ inorder­to­preserve­its­solvency,­a­controlling­
Date Transaction object Proprietor Purchasing Company Purchaser’s structure Nature of transaction
and price
January 2008 Property complex, building and
surrounding lot on Vostania
Ulitsa, 18a
January 2008 100% share of the commercial and
technical complex Ugtechcomplekt
May 2008 Property Complex Shopping Center
Na Bagrationovskom
RFFI, Russian Fund of Federal
Property
St. Petersburg; Moscow and other
Russian regions
BFA-Development Former team of managers from
the Industry and Construction
Bank St. Petersburg
Buy/sell property complex,
$11.7 million
Alexei Kirillov Rostov region Agromarket Agroproduct Stavropol region Buy/sell portion,
$150 million
Rubin Development, Moscow Orco Property
Group SA
July 2008 100% equity of Nova-Stroy Oleg Cherepanov Controlling Equity
Package Yekaterinburg
August 2008 49,5% (49,0% portion)
Fire & Cooper Makromir
Andrei Rogachev and Pavel Andreev
– 49.5% each Great Britain (Russia,
St. Petersburg – M&A Petersburg);
St. Petersburg
December 2008 100% equity Agrotorg-Rostov, managing the
Pyatyorochka chain of supermarkets
in the Rostov region
Institutional Investors, free-float
Luxembourg; Russia (Moscow)
and other European Cities
LSR Group Andrei Molchanov – 71%,
Mikhail Romanov – 20%, Georgiy
Vedernikov – 3.0%, Igor Levit –
3.0%, Janna Yatsyshina – 3.0%
St. Petersburg, Moscow
N/A Andrei Rogachev
N/A; St. Petersburg
Buy/sell property complex,
$300 million
Buy/sell equity share,
$160 million
Buy/sell portion,
$550 million
X5 Retail Group N.V Buy/sell portion, about
$15 million
February 2009 51% equity Eldorado PPF Group Loan conversion into
equity in the share
capital