Economics

12:21, 19.05.2008 | Far East Russia

FESCO Group , Russia's top container shipping firm, said on Thursday it had approved a share issue worth $767 million to fund acquisitions as it seeks to expand its presence in Russia's key foreign trade gateways.

The company said it had agreed to buy a further 50 percent stake in the Vladivostok container terminal for $200 million from N-Trans, Russia's largest private railway shipper. The deal is expected to close in July.

FESCO, or Far Eastern Shipping Co, said in a statement its board of directors had approved an issue of 590.25 million new common shares equal to around 25 percent of its share capital.

"We raise new equity to finance the underlying investment programme and strengthen our presence in key business areas," FESCO Chief Executive Officer Yevgeny Ambrosov said.

FESCO announced plans to issue new shares in April. The offering, earlier scheduled for August, will make new shares available to existing shareholders and new investors.

Last year, FESCO raised $420 million in two share issues.

"Part of the proceeds of this new issue ... will be used for the acquisition of 50 percent in Vladivostok Container Terminal," Ambrosov said.

FESCO controls 25 percent in the terminal which will be able to ship 600,000, 20 foot-equivalent units per year once its expansion is completed.

The total amount of container operations by companies in the group was 2.4 million TEUs in 2007, up 30 percent from 2006.

"This deal is a key milestone in our strategy aimed to create an intermodal shipper of container cargoes between European and southeastern Asian countries via the Russian territory," said FESCO Chairman Siman Povarenkin.

FESCO, which has its own fleet and rolling stock, had said it wanted to merge its sea and railway assets to create an all-Russian multi-faceted shipper.

It is majority controlled by the group Industrial Investors, led by former energy minister Sergei Generalov. Apart from the Far East, it operates on the Baltic Sea and Black Sea.

A small portion of its stock is freely floated on Moscow's RTS exchange. Shares in FESCO trade at $1.3.

Net profit at FESCO group rose by 58 percent in 2007 to $103 million, while revenue was up 51 percent to $872 million.

-Reuters