45ET Bp Cap. 28

TIDM45ET

RNS Number : 4412D

Georgian Railway LLC

16 May 2012

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,

IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR

JAPAN

This announcement is an advertisement and not a prospectus for the purposes of Directive 2003/71/EC (together with any applicable implementing measures in the relevant home member state under such Directive) (the "Prospectus Directive"), and investors should not subscribe for or purchase any GDRs referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") to be published by JSC Georgian Railway in due course in connection with the Offering (as defined below) and Admission (as defined below).

FOR IMMEDIATE RELEASE 16 May 2012

Georgian Railway IPO - Price Range Announced Today

The JSC Partnership Fund (the "Selling Shareholder") today announces the price range for the Initial Public Offering (the "Offering" or "IPO") of Shares in JSC Georgian Railway ("Georgian Railway" or the "Company"), Georgia's integrated and statutory railway monopoly, in the form of Global Depositary Receipts ("GDRs") to be listed on the London Stock Exchange.

Highlights

-- IPO price range set at US$15.25 to US$19.00 per GDR, with each GDR representing 20 Shares in Georgian Railway

-- Offering to comprise the sale of up to 262,437,800 Shares in the form of 13,121,890 GDRs (1 GDR equals 20 shares), including Shares subject to an overallotment option, representing up to 25% of Georgian Railway's authorised share capital

-- Offering valued at least at US$200 million to US$250 million on the basis of the price range, including Shares subject to the overallotment option

-- Georgian Railway market capitalisation valued at approximately US$800 million to US$1,000 million on the basis of the price range

   --    Intention to pay out 60% of 2012 IFRS consolidated net profit as dividends 

-- Institutional bookbuilding and roadshow commence today and are expected to close on or before 23 May 2012

-- Pricing and allocations are expected to be announced and listing and conditional dealings in the GDRs on the London Stock Exchange are expected to commence on 24 May 2012

Comment

Commenting on today's announcement, Irakli Ezugbaia, CEO of Georgian Railway, said;

"Georgian Railway is uniquely positioned with its combination of statutory monopoly and deregulated tariff-setting and its track record of profitable growth. We look forward to meeting prospective investors and sharing with them our plans to capture the considerable further growth and development opportunities we see for our business in the region."

The IPO will comprise the sale of up to 262,437,800 existing Shares in the form of 13,121,890 GDRs (1 GDR equals 20 shares), held by the JSC Partnership Fund representing (including shares subject to an overallotment option) up to 25% of Georgian Railway's authorised share capital. The Shares will be offered in the form of GDRs to institutional investors outside the United States in reliance on Regulation S and to certain qualified institutional buyers in the United States under Rule 144A.

The price range for the IPO has been set at US$15.25 to US$19.00 per GDR, with each GDR representing an interest in 20 Shares.

On the basis of the price range the Offering is valued at least at US$200 million to US$250million, including Shares subject to the overallotment option, and Georgian Railway's market capitalisation is valued at approximately US$800 million to US$1,000 million.

Application will be made to the UK Listing Authority and the London Stock Exchange, respectively, for the GDRs to be admitted to the standard segment of the Official List of the UK Listing Authority (the "Admission") and to trading on the London Stock Exchange's regulated market for listed securities.

Following the IPO, there will be a lock-up period of 180 days for the Company and existing shareholders.

Institutional bookbuilding commences today and is expected to close on or before 23 May 2012. Pricing and allocations are expected to be announced and listing and conditional dealings in the GDRs on the London Stock Exchange are expected to commence on 24 May 2012, subject to receipt of all necessary regulatory approvals, including the relevant registrations and approvals by the UK Financial Services Authority, and to favourable market conditions.

The Offering and Admission are expected to enhance the Company's international capital markets profile and access, providing strategic flexibility to support its long term growth and development.

Citigroup and Goldman Sachs International have been appointed as Joint Global Coordinators and Joint Bookrunners for the IPO.

Ends

Enquiries

   Citigate Dewe Rogerson                                                          +44 (0)20 7638 9571 

Andrew Hey

David Westover

Marina Zakharova

Justin Griffiths

This announcement and the information contained herein is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. No public offering of the securities will be made in the United States.

NOTES TO EDITORS

Georgian Railway

Georgian Railway is Georgia's integrated and statutory railway monopoly. It principally provides freight services and sets its own tariffs without regulation. Forming a key part of the TRACECA corridor, the shortest transit route from the Caspian Sea and Central Asia to the Black Sea and the Mediterranean Basin, the Company is well positioned to capitalise on strong regional GDP growth, increasing trade volumes and increasing demand for transportation of the region's growing oil production volumes.

The Company generated revenues of GEL477.4m (USD 283.2m), EBITDA of GEL259.9m (USD 154.2m) and net income of GEL 174.4m (USD 103.4m) for the year to 31 December 2011, representing year-on-year growth of 18.0%, 33.4% and 71.8% respectively. Its EBITDA margin in the same period was 54.4%.. The Company currently expects to maintain a minimum dividend payout ratio of approximately 30 per cent of any consolidated net profit (calculated in accordance with IFRS). For 2012, the Company intends (with the approval of its current shareholders) to pay out 60% of any consolidated net profit (calculated in accordance with IFRS). Thereafter, for the period from 2013-2017, subject as provided below, the Company intends to pay annual dividends at rates in excess of the minimum payout ratio. The Company's ability to pay a dividend in any given year will, however, depend on many factors, including the Company's earnings, cash requirements and financial condition and macroeconomic conditions, assessment of investment and growth opportunities available to it and of the overall capital markets environment at the time, as well as the Company's focus on maintaining a strong credit rating and enhancing long-term shareholder value. Whether the Company will pay dividends and the timing and amount of such dividends payable for a given year must be endorsed by the GMS on the recommendation of the Board of Directors, such recommendation being subject to approval by the Supervisory Board. In circumstances where the Supervisory Board does not approve the recommendation of the Board of Directors, the recommendations of both the Board of Directors and the Supervisory Board shall be submitted for approval to the GMS.

In line with its strategy to consistently improve its profitability, management is pursuing several projects to drive further efficiencies and incremental revenue growth. These include: the USD 420m "Modernisation Project", which according to the Company's estimates may deliver annual savings in operating costs of up to 40% compared with 2008-10 total operating costs in the areas affected by the Modernisation Project upon its completion by 2016; the development of its containerisation operations, increasing the proportion of higher value dry cargo transit in its revenue mix; and network expansion into new transit routes including the Baku-Tbilisi-Kars project, a new, rail-only corridor from the Caspian Sea to Europe via Turkey without the need for sea transportation.

In any member state of the European Economic Area that has implemented the Prospectus Directive this communication is only addressed to and directed at persons who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors").

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, (i) Qualified Investors who are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i) and (ii) above together being referred to as "relevant persons"). Any invitation, offer or agreement to subscribe, purchase or otherwise acquire any securities will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Persons distributing this document must satisfy themselves that it is lawful to do so.

The Securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act") and may not be offered or sold within the United States except pursuant to an exemption from, or in transaction not subject to, the registration requirements of the Securities Act.

Any purchase of GDRs in the Offering should be made solely on the basis of the information contained in the Prospectus and the pricing statement in connection with the Offering. Copies of the Prospectus will, following publication, be available from the Company's registered office at 15 Tamar Mepe Avenue, Tbilisi 0112, Georgia. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information in this announcement is subject to change.

The timetable of the Offering, including the date of Admission, may be influenced by a range of circumstances such as market conditions. There is no guarantee that Admission will occur, and you should not base your financial decisions on the Company's intentions in relation to Admission at this stage. Acquiring GDRs to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering making such an investment should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the Offering. The value of GDRs can decrease as well as increase. Potential investors should consult a professional adviser as to the suitability of the Offering for the person concerned.

Citigroup Global Markets Limited and Goldman Sachs International, each of which are authorised and regulated in the United Kingdom by the FSA, are acting exclusively for the Company and the Selling Shareholder and no-one else in connection with the Offering. They will not regard any other person as their respective clients in relation to the Offering and will not be responsible to anyone other than the Company and the Selling Shareholder for providing the protections afforded to their respective clients, nor for providing advice in relation to the Offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements speak only as of the date they are made.

Each of Citigroup Global Markets Limited, Goldman Sachs International, the Company and the Selling Shareholder and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

In connection with the Offering, Citigroup Global Markets Limited and Goldman Sachs International and any of their respective affiliates, acting as investors for their own accounts, may subscribe for or purchase GDRs and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such GDRs and other securities of the Company or related investments in connection with the Offering or otherwise. Accordingly, references in the Prospectus, once published, to the GDRs being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by Citigroup Global Markets Limited and Goldman Sachs International and any of their affiliates acting as investors for their own accounts. Citigroup Global Markets Limited and Goldman Sachs International do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

None of Citigroup Global Markets Limited and Goldman Sachs International or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of, the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith.

In connection with the Offering, Citigroup will act as stabilising manager (the "Stabilising Manager"). The Stabilising Manager, or any of the agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot GDRs or effect other transactions with a view to supporting the market price of the GDRs at a higher level than that which might otherwise prevail in the open market. The Stabilising Manager is not required to enter into such transactions, and such transactions may be effected on any stock market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings of the GDRs on the London Stock Exchange and ending no later than 30 calendar days thereafter. However, there will be no obligation on the Stabilising Manager or any of its agents to effect stabilising transactions, and there is no assurance that stabilising transactions will be undertaken. Such stabilising measures, if commenced, may be discontinued at any time without prior notice. In no event will measures be taken to stabilise the market price of the GDRs above the offer price. Save as required by law or regulation, neither the Stabilising Manager nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilisation transactions conducted in relation to the Offering.

This information is provided by RNS

The company news service from the London Stock Exchange

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MSCLIFSEEVIRLIF