ALROSA's Sunland Loaned Wargan $150M to Buy Up Shares

Wargan Holdings Ltd., which is one of the parties selling shares in the IPO of ALROSA, spent $150 million buying up shares in the Russian diamond company, a prospectus for the offering, obtained by Interfax, shows. Wargan holds 150,237,500, or 2.04 percent of ALROSA, all of which will be sold in the IPO. Based on the price range for the offering of RUB 35 to RUB 38 per share, or about $1.09 to $1.18 per share, the sale of the quasi-treasury stock will earn ALROSA between RUB 5.26 billion and RUB 5.7 billion, or $163 million to $177 million at the Central Bank's current exchange rate.

In addition to the quasi-treasury stock, the IPO on the Moscow Exchange will offer 14 percent of shares belonging equally to the governments of Russia and Yakutia, where ALROSA's main diamond mining operations are located. The IPO will reduce the federal government's stake from 50.92 percent to 43.9 percent and Yakutia's stake from 32 percent to 25 percent plus one share. The free float will increase from the current 9 percent (2 percent of which is treasury stock held by Wargan) to 23 percent.