Month: July 2010

Feeling War

On Jul 26 2010

Yesterday’s New York Times Week in Review Article: “The War – A Trillion Can Be Cheap” made a very insightful point about the fact that since we do not feel the war, we are divorced from it. Meanwhile it is draining our collective coffers at a startling rate.

Meanwhile I am currently reading, “The Balkan Trilogy,” by Olivia Manning which chronicles the lives of Harriet and Guy Pringle as they live through World War II, first in Romania, then escaping to Greece (which is where I am in the book). The semi-autobiographical tale makes you feel the privation wrought by war – the lack of food (as the Greeks fight the Italians all the best food goes to the soldiers, what is left is intestines), the lack of comforts like a coat for winter (Harriet, having had to flee Romania when the Nazis occcupied the country fled without her one winter coat, and wonders as the Greek winter sets in if she will have the money to buy another.)

How lucky are we today to not feel war as the NYT points out – to have the choice of meals and closets full of clothes. We should not forgot the toll previous wars wrought, and should be more thoughtful about staying on our current course.

Ukraine Econ Upturn As its Billionaires Start to Raise Cash

By admin

On Jul 22 2010

In Billionaires

Ukraine’s youngest billionaire, Kostyantin Zhevago, who almost lost his iron ore producer, Ferrexpo, when markets crashed two years ago, is back raising cash. According to Millenium Capital, Ferrexpo completed its road-show July 16 planning to place Eurobonds worth $500 million. The company plans to ramp up production by 50% over the next five years, and has the iron ore reserves to do so. ADDENDUM: It appears the Eurobond issue has been postponed.

This follows on the heels of fellow billionaire, Rinat Akhmetov, and the announcement that his steelmaker Metinvest raised $700 million via syndicated loan.

Ukraine has had success recently, negotiating a new $14.9 billion loan program with the IMF. As a result, Fitch upgraded Ukraine’s sovereign bonds stating “The IMF agreement improves the sovereign’s financing flexibility and will unlock additional funds from other international financial institutions.”

There is still a long-way to go — Ukraine’s real GDP fell 15.1% in 2009, according to Fitch, marking the second-worst economic performance after Latvia of the over 100 sovereigns rated by the agency — but billionaire confidence appears to be back up.

Gold Tussle: Russia vs. Kazakhstan

By admin

On Jul 13 2010

In Billionaires

Plans by the owners of Russia’s top gold producer, Polyus Gold, including Russian billionaires, Mikhail Prokhorov and Suleiman Kerimov, may be thwarted in their efforts to buy Kazakh gold miner KazakhGold Group.

The Kazakh government this week annulled a merger of the two evoking the 2007 Subsoil Law which allows the government to annul any contract involving the use of subsoil resources in the country if it is of national strategic importance the government. The government is reportedly concerned over a low deal price.

If the deal were to go ahead, the merged company – to be called Polyus Gold International Limited – is expected to become one the world’s leading gold mining companies, whose shares will trade on the London Stock Exchange as a single company. (Polyus Gold plans to delist its ADRs from the LSE.)

Event timeline:

*December 2008, Polyus Gold announced first offer for stake in KazakhGold; estimated above $700 million

*April 2009, negotiations announced to adjust offer. In a statement KazakhGold wrote, the “Company’s production levels and working capital levels have deteriorated substantially more rapidly than previously anticipated and KazakhGold requires a funding commitment, in order to continue to operate as a going concern in its current form. Due to these wholly exceptional circumstances, the terms of the Proposed Partial Offer as announced on 29 December 2008 are no longer valid, however, KazakhGold and Polyus Gold remain in active negotiations to agree revised terms in respect of the Proposed Partial Offer.”

The price was adjusted down about 60%.

*July 2009: Polyus Gold, through its indirect wholly-owned subsidiary, Jenington International Inc. (“Jenington”), made a recommended partial offer to acquire 50.1% of the issued and to be issued share capital of KazakhGold. The Partial Offer was declared unconditional on 14 August 2009.

*June 25, 2010: KazakhGold Group Limited (“KazakhGold”); its wholly-owned subsidiary, KAZAKHALTYN MMC JSC (“Kazakhaltyn”); and Jenington International Inc., a wholly-owned subsidiary of OJSC Polyus Gold (“Jenington”); commenced proceedings in the High Court of Justice (Chancery Division) in London against five members of the Assaubayev family who were former directors of KazakhGold; Gold Lion Holdings Limited (“Gold Lion”) and Hawkinson Capital Inc., (“Hawkinson”). Gold Lion was, prior to completion of the Partial Offer by Jenington to acquire 50.1% of the issued share capital of KazakhGold in August 2009, the principal shareholder of KazakhGold. The defendants include Kanat Assaubayev, who was Executive Chairman of KazakhGold until the completion of the Partial Offer, and Aidar Assaubayev, the former Executive Vice Chairman, who continued as a director until his appointment was terminated on 17 June 2010.

*June 30, 2010, KazakhGold and Polyus Gold, which owns 50.1% in KazakhGold via its subsidiary Jenington International Inc, announced a reverse merger, under which KazakhGold would acquire its parent company Polyus Gold. Under the scheme, one share of Polyus Gold will equal 9.26 Global Depositary Receipts of KazakhGold, and one American Depositary Receipt of Polyus Gold will equal 4.885 GDRs of its subsidiary.

Ukrainian billionaires behind Privat Group Take on Russian Billionaire Makhmudov

By admin

On Jul 08 2010

In Billionaires

Ukrainian billionaires, Henadiy Boholyubov and Ihor Kolomoyskyy, via Mantara Holding, a company close to the their jointly-owned Privat Group, may be in for a fight over Ukrainian locomotive-maker, Luhanskteplovoz, with Russian billionaire, Iskander Makhmudov.

Mantara Holding filed a lawsuit with the State Property Fund of Ukraine (SPF) to cancel the sale of Luhanskteplovoz to Transmashholding, Russia’s largest maker of locomotives and rail equipment, which is owned in part by Makhmudov.

According to Millenium Capital analysts, Privat “seems to be determined to embark on the protracted litigation proceedings to void the privatization sale results.” Mantara Holding is reportedly willing to pay as much as UAH 600mn (about $77 million) for Lukanskteplovoz compared to the UAH 410mn (about $52 million) paid by Transmashholding. In fact, Transmashholding bid only slightly above the original asking price of UAH 400 million when the tender was held in mid-June for a 76.001% stake in the Ukrainian rail-maker.

In Boholybov and Kolomoyskyy’s corner: Serhiy Tihipko, the Deputy Prime Minister for Economic Affairs, who stepped in this week to express concern over the transparency of the Luhanskteplovoz sale. According to Millenium, this may up their chances of taking back the asset from Russian interests.

Yet another round in Ukraine vs. Russia.

Luxe travel not set to recover until next year

By admin

On Jul 07 2010

In Travel

Global Markets recently interviewed Mark Tamis, COO of Setai Hotels and Resorts, about his expectations for the global travel industry and how Setai, a luxury concept targeting “the world’s most coveted and affluent consumers,” stays on top. An excerpt of the conversation follows:

Global Markets: Let’s talk about the past several years in travel.

Tamis: “Challenging would be an understatement. We felt it coming two years ago but never understood the full magnitute in the decline of travel. The very top of the market was severely affected. At that end, people don’t have to travel or if they travel they can choose scaled down accomodations; so the higher up you are in a category the more affects you will feel.”

Global Markets: Are we seeing a recovery?

Tamis: “Knock on wood we’ve seen the bottom. We’re fairly conservative. 2010 is more about stabilization. 2011 is more of a recovery, 2012 a strong recovery. But it won’t be til 2013 that we see the same numbers in travel that we saw in 2007/2008.”

“For example, Miami is such a Northeast travel market. As Wall Street recovered and confidence returned, we started to see an uptick in the first two quarters of the year. We’re also getting the European and Latin American travellers.” [Setai Group operates The Setai in South Beach, one of the world’s most exclusive hotels]

Billionaire Post Office

By admin

On Jul 05 2010

In Billionaires

I recently read Mrs. Adams in Winter, a wonderful historical biography that took me on a carriage ride from Russia to France along post roads in 1815 (the upkeep of roads was not for individual travel per se but to ensure swift and efficient mail communiques). Not only were the roads she travelled important in ensuring her safety in a resurgent Napoleonic period, but the stations she passed to get fresh horses and rest said a great deal about the wealth and politics of the land.

History yes. But present as well. Prince Albert von Thurn und Taxi, the billionaire German prince whose fortune Forbes estimates at $2.2 billion, has ties back to these post roads. His diversified family fortune can be traced back to being to general postmasters of the Holy Roman Empire and the postal services in Europe in the 16th century.

The horsepower the billionaire postmaster today uses is race cars not equine. The avid racecar driver took delivery of a Chevrolet Corvette ZR1 last year. Nice one for those old post roads.