MOSCOW, April 6 (RIA Novosti) Ukrainian president left alone with his problems/London to toughen rules for holding Russian company IPOs /Air France-KLM set to help Aeroflot take over Alitalia/Magna's design too costly for Russia/Yukos loses license for Black Sea asset
Nezavisimaya Gazeta
Ukrainian president left alone with his problems
An offspring of Ukraine's 2004 "orange" revolution was the idea of limiting the president's political influence. Aimed at then-President Leonid Kuchma, the idea of changing the political balance in favor of parliament looked very "European."
As a rule, the desire to transform one's country into a developed democracy usually occurs to opposition politicians.
Uncertainty over his victory in the presidential election forced Viktor Yushchenko's supporters to amend Ukraine's Constitution so as to turn the country from a presidential into a parliamentary republic.
However, Yushchenko won the race, and the decision to do so was almost immediately regretted.
Getting nervous, Yushchenko betrayed Yulia Tymoshenko, his rating plummeted, and he joined forces with Viktor Yanukovych. But nobody needed such a president - either in Ukraine, Russia or the West.
Since Russia's relations with the Untied States were deteriorating at the time, it looked as if the Americans might exploit Yushchenko's weakness.
One can understand Yushchenko, but that is the wrong moment. The economic situation in Ukraine has improved since Yanukovych became prime minister, and so it will be difficult to prove that his government is hindering reforms.
Ukrainians need only such reforms as will improve their material situation.
The political crisis in Ukraine has proved that a change of political structure is not a mere technicality. The presidential system of power in "the former Soviet democracies" cannot be changed into a parliamentary system by a mere amendment of the Constitution.
The form of power should reflect the mentality of the elite at the very least, and ideally the mentality of the public as a whole. If the elite and the people sense weakness in the way authorities reason, they react accordingly and spin out of control.
That pushes the issues of reform and the choice of European values into the background, and the struggle for power to the forefront.
Kommersant
London to toughen rules for holding Russian company IPOs
Britain's Financial Services Authority (FSA) intends to toughen its rules for holding foreign company IPOs.
According to the British media, this may affect Russian companies, too.
Experts believe that the FSA's intentions have been provoked by the case of PriceWaterhouseCoopers (PwC), which has been accused of providing false reports on the Yukos oil company, declared bankrupt last summer, and by the quality of Russian companies' audits.
Market players said that could lead to a refusal by Russian issuers' to place their papers on Western stock markets.
At present, Russian companies ensure the bulk of securities circulation on the London Stock Exchange. Last year, they accounted for about 70% of foreign companies' placements.
As estimated by investment banks, this year Russian companies are planning to float $30 billion worth of securities. Considering the proportion of share placement on Western trading venues, the LSE may get up to $20 billion worth of securities.
The FSA's statements might have been provoked by the situation around auditing reports on Russian companies, in particular by developments around PwC, which audits several dozen Russian companies.
"Perhaps, this is an echo of the PwC case," says Oleg Vyugin, head of the Federal Financial Markets Service.
John Litvak, chief economist on Russia at the World Bank, suggested that the PwC case has damaged the auditors' reputation and that the West might start doubting the companies audited by PwC.
Andrei Nechayev, president of the Russian Finance Corporation, doubts that the situation is a reaction to the PwC scandal.
"Probably, the reason is London's desire to set itself right with the United States for giving many Russian companies access to IPOs," he said.
In Oleg Vyugin's opinion, the FSA's statements could make some placements on the LSE impossible, "for instance, the placement of shares of a minor oil company which has not started oil production yet but has a license to develop a field, or a fund which has several land plots for construction in Moscow and wants to hold an IPO for its project," Vyugin said.
Ovanes Oganisyan, a top analyst with Renaissance Capital, Russia's leading Western-standard investment bank, said: "If the LSE toughens its rules, it will lose its main competitive advantage against the New York Stock Exchange."
Gazeta.ru
Air France-KLM set to help Aeroflot take over Alitalia
French-Dutch Air France-KLM, the largest European air carrier, may help Aeroflot Russian Airlines, the largest national carrier, to buy Italy's loss-making Alitalia airline.
The influential company may join a consortium, which was established by Aeroflot and the Italian bank Unicredit, a source told the La Repubblica newspaper.
Aeroflot officials declined to comment on the reports.
The deal would suit the Italian government, which has created a loophole for it in the tender regulations.
But Aeroflot will have to try hard to involve Air France-KLM, which has already refused to buy Alitalia, in the deal.
In early 2007, Air France-KLM refused to take part in the initial tender, saying the hard-to-restructure Alitalia was an expensive asset. The company's representatives said they would not consider the purchase as long as Alitalia remained in the red.
But analysts said Air France-KLM is likely to win the tender.
Starting April 2, no other companies will be allowed to bid in the tender. However, Italian Industry Minister Pierluigi Bersani said any consortium could include new bidders.
"The Italian government thought Air France-KLM was the most desirable buyer for Alitalia," said Anastasia Zhdanova, an analyst with the BrokerCreditService brokerage.
She said the government is still reserving space for Air France-KLM.
Thanks to the Italian government's terms, the company will hardly change its initial plans, a Barnes & Noble (BKS) analyst told the paper.
It would very hard to cut back on corporate spending, because any potential buyer has no right to ax jobs and wages during restructuring.
"Air France-KLM is unlikely to bid, unless the initial terms are changed," Zhdanova said.
Even if the French-Dutch company refuses to bid, it can still help Aeroflot.
"I believe it will provide consultative services rather than financial aid," said Alexei Pavlov, head of analysis at the investment group Vika. "It can also offer its reputation and great connections."
According to Pavlov, Air France-KLM may bid on these terms.
Vedomosti
Magna's design too costly for Russia
A new Russian S-class car, developed by the Canadian company Magna for the AvtoVAZ carmaker, does not fit into the $10,000 to $12,000 price bracket, but will cost 10% to 20% more.
That is a disaster for AvtoVAZ, experts said, because its foreign competitors can already offer vehicles priced under $10,000.
The framework cooperation agreement for the development of a new platform for the Lada and the setting up of an AvtoVAZ assembly plant in Togliatti was signed by the two companies December 22, 2006.
The first stage of the new plant, with a capacity of 220,000 cars a year, is to go online in 2009.
AvtoVAZ is unhappy that the new car is going to cost 20% more than expected ($12,000-14,000), a source in the auto giant management said.
But there is nothing surprising about that, because in the course of realizing the vehicle, its cost may grow again, to $15,000 at the least, said Yelena Sakhnova, an analyst with Deutsche UFG.
For the Lada, that is unacceptable. A Renault Logan already sells at prices as low as $9,500, and by 2010, Nissan, Toyota and Volkswagen want to go on the Russian market with budget models priced under $10,000.
If their projects succeed, AvtoVAZ will find it hard to survive, even if it cooperates with Magna.
A businessman familiar with AvtoVAZ management does not rule out a breakdown of cooperation between AvtoVAZ and Magna. But sources in both companies said their partnership should not yet be given up for lost.
AvtoVAZ is pressed for time. If it fails to roll out a new model by 2010, it will lose its market, one of the plant's top managers said in an interview with the paper.
Deutsche UFG forecasts a drop in AvtoVAZ's presence on the market from 31% in 2006 to 28% in 2010.
That is why AvtoVAZ will try to follow the project to the end, said Igor Korovkin, executive director of the Association of Russian Automakers. To change horses in midstream, he said, would mean losing time.
An alternative to Magna could be a project with Renault, but that is stalled, said Sakhnova. However, Renault spokeswoman Olga Sergeyeva said Thursday that consultations are still underway.
Alexander Navolotsky, director of Russia's Magna office, and an AvtoVAZ spokesman declined to comment.
Vremya Novostei
Yukos loses license for Black Sea asset
The Russian authorities have decided to revoke Yukos's license for Val Shatskogo, which is part of the ninth lot at the forthcoming auction of the now bankrupt company's property.
A source in the Russian Federal Agency on Subsoil Use said yesterday that the license for the Black Sea section was annulled because it had expired. Now, the future buyer will get only a shell company under which the asset was registered.
However, LUKoil, which is viewed as the frontrunner at the auction May 3, said it was not too disappointed.
"There are other equally interesting assets [in the ninth lot], such as stakes in southern energy companies and the Caspian Oil Company. They are more attractive for us," a company representative said.
The starting price of the lot is 3.712 billion rubles.
Experts from the state scientific center Yuzhmorgeologiya who study the Black Sea shelf said that Val Shatskogo is one of the most promising sectors in the area.
"The depression goes in a broad strip along the coast from Georgia almost to the Crimea," an expert said. "Surveys have found several promising areas that could hold oil reserves of 70 to 150 million metric tons, but these areas are deep below ground, some 1.2-2 kilometers, (0.75-1.25 miles), so there has been no drilling, which means that the oil reserves are not proved. So if Val Shatskogo does not have oil, most probably other Black Sea sectors do not have any either."
Yukos received a license for the sector's exploration in 2001. In 2002, it signed an agreement with French Total on joint work on the sector, but as soon as the notorious Yukos case began, the French company quit the project.
If the sector gets in the unallocated fund and is put up for auction later, it will be likely to be bought by state-owned oil major Rosneft, which already holds a license for another Black Sea sector, the Tuapse depression.
"The Tuapse depression lies right between Val Shatskogo and the coast. It is the second most promising area after Val, so this way Rosneft could accumulate the key oil-bearing areas of the Black Sea," an expert with Yuzhmorgeologiya said.
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