Alfa Bank
16.04.2008 Kazakhstan Kagazy, a producer of paper, corrugated board and packaging products in Kazakhstan and a real estate developer, announced its has acquired a 90% stake in Astana Contract Co., a leading logistics and warehouse operator in Central Asia.
Astana Contract owns a full-service container terminal located 1.8 km from Almaty, with a processing capacity of 60,000 containers per year and two class A storage facilities with 50,000 sq m of total space. The terminal is used by Maersk Sealand, CARU, MSC and Hapag-Lloyd.
In a regulatory note issued April 14, the company said the total consideration to be paid is $57.6 mln.
Kazakhstan Kagazy will make an upfront payment of $25.6 mln from its IPO proceeds. From this upfront payment, $3.6 mln will go to Astana Contract shareholders and $22.0 mln will pay for the newly issued shares of the company. The remainder of the payment for Astana’s existing shares (a total of 55% of the enlarged capital) of $32 mln will be paid on a deferred payment basis after two years and will be financed from the cash flows of the company.
Importantly, Kagazy will assume $39 mln in debt from the new company, which effectively results in the company’s Debt/Equity ratio increasing to 0.58 from the previous 0.48 as reported in 9M07 financial statements.
We feel this acquisition makes sense given the current prices for real estate in Kazakhstan are low. In addition, this acquisition may help the company to accentuate its specialty in Kazakhstan’s real estate market being logistics and warehousing business which at some point will necessitate divesting the paper packaging business into a separate operation.
Rinat Gainoulline Analyst (+7 495) 795-3744