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China’s Fosun Group is in talks with Polyus Gold International Ltd (PGIL), which controls Russia’s largest gold producer PJSC Polyus, on potentially acquiring a blocking stake (25% + 1 share) for around $2 bln, Kommersant writes citing sources. The deal may be clinched soon, either by the end of this year, or at the beginning of 2017, a source told the newspaper. Meanwhile, two other insiders said there was no timeframe for the transaction, as the talks with Fosun have been underway "for a long time, focusing on a wide range of issues."
According to Kommersant, the Chinese company will gain the veto right regarding bid transactions, one seat on Polyus’ top management, two seats on the board of directors and the right to nominate one independent director in case the parties reach an agreement. The planned deal has to be approved by Russia’s governmental commission on foreign investments as Polyus develops deposits with reserves of more than 50 tonnes, or a federally significant subsurface area. Also, almost 90% of PGIL shares are secured with a long-term $6 bln loan from Sberbank, which means any transactions with the company’s shares require the approval of Russia’s top lender.
Founded in 1992 by Guo Guangchang, Fosun has shelled out more than $15 bln on its aggressive acquisition strategy since 2010. The initial plan was to tie the talks on the deal between Fosun and Polyus Gold to the Russian PM’s upcoming meeting with his Chinese colleague Li Keqiang in St. Petersburg, sources told Kommersant. However, the issue is unlikely to be raised during the visit, since the transaction is in its early stages.
As both sides mark the adverse effects of anti-Russia sanctions imposed by the European Union and Russia’s food embargo reciprocally slapped on EU countries, Moscow has offered Greece a way out of the current dilemma. According to a source in Russia’s foreign policy circles speaking with Izvestia, an idea to skirt sanctions by creating joint ventures has been voiced within the Russian-Greek Commission on Economic, Industrial and Scientific and Technical Cooperation. "Russia cannot make an exception for one country, so Moscow has offered mixed production," the source said, adding that the issue had been raised at the Athens talks, referring to the recent visit by Russian Foreign Minister Sergey Lavrov to the country and his meeting with Greek President Prokopis Pavlopoulos.
Greece used to be a major supplier of agricultural products to Russia prior to the sanctions, and has seen bigger losses than many of its colleagues in the European Union, the newspaper writes. Trade turnover between the countries plunged 39.2% in 2014 and by another 34% in 2015, Izvestia says with reference to data provided by the Federal Customs Service. Meanwhile, in January-July 2016, Russian-Greek trade turnover dropped 9.8% year-on-year. Also, tourist flows from Russia to Greece have jumped by more than 20% in the first half of this year compared with the same period in 2015.
Russia may suspend flights to Tajikistan on a unilateral basis on November 8 due to Dushanbe’s reluctance to approve flights from Moscow’s new Zhukovsky International Airport to the Central Asian country, sources in the industry and Russia’s Transport Ministry told Kommersant. The Tajik side says since Zhukovsky is now the fourth full-functioning airport of Moscow’s airport hub, by assigning airlines for additional flights to Dushanbe and Khujend, Russia has increased the number of air carriers and the flying rate on a unilateral basis, one of the source said.
According to a source in Russia’s Transportation Ministry, who spoke with the newspaper, three federal airports - Vnukovo, Domodedovo and Sheremetyevo - belong to Moscow, while Zhukovsky International Airport belongs to the Ramensky region. "The attempt by Tajikistan to define the status of the Russian airport violates the sovereignty of Russian authorities on their own territory," while its refusal to approve assignments of Russia carriers from Zhukovsky "directly violates" the intergovernmental agreement on air links between the countries, the source added.
The passengers on those routes are mainly "migrant workers from Tajikistan, which provide up to 48% of the country’s GDP at Russia’s expense," the source in the Ministry told Izvestia, adding that unless the Tajik authorities change their position, Russia will suspend flights to the country in order to "avoid infringing the rights" of Russian airlines.
If Russia’s Central Bank succeeds in maintaining inflation at levels of 3-4% for at least two years this will drastically change Russia’s economic situation, Chief Executive Officer of VTB24, the retail banking arm of Russia's second-biggest lender, VTB, Mikhail Zadornov told Izvestia daily, adding that he supports the regulator’s tough policy aimed at tackling rising prices. "If inflation keeps at 3-4% for at least a couple of years this will completely change the behavior of both business and population, resulting in a very serious breakthrough in economic patterns," he said.
According to Zadornov, "the economy won't stand a chance to reach sustainable development with 10% inflation and 13-15% interest rates." "Major projects in manufacturing, in science and technology, and infrastructure are long-term and will take time to pay off," he noted. Though the Bank of Russia sees risks in increased consumer lending, the CEO disagrees and views it as a needed economic driver to kick start growth. "Russian consumers used to buy imported goods, which left no drivers for local production. Now, this is no longer the case, since imports and outbound tourism have plunged over the past two years. That is why consumers will presently focus on Russian goods and services as they spend more," Zadornov explained.
The company has not yet discussed the new airline launch plan with its creditors, who will eventually have the final decision on the issue, its spokesman Maksim Bukin told RBC business daily. "The company’s management together with leading consultancies have put together a feasible and functional plan to launch a new airline on the basis of Transaero," Bukin said, adding that members of the board of directors will have one week to look through the plan and present their estimations. "However, considering the current climate, creditors will have the final say on the plan in any case," he added.
Oleg Panteleyev, Executive Director of AviaPort, thinks it is senseless to establish a carrier on the base of a legal entity overburdened with billions of dollars in debts. However, he told RBC, if all sides involved give the idea the green light, it will take at least six months to obtain an air operator’s certificate from Russia’s Federal Air Transport Agency. Restarting the company’s operations will require anywhere from several million to more than $100 mln worth of investments, the expert added.
Transaero, formerly Russia’s second largest airline, faced financial difficulties and failed to maintain operations and repay debts. In October 2015, the Russian government made a decision on Transaero’s bankruptcy and the aviation regulator canceled the company’s operator certificate.
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