KGHM Offer Oversubscribed, Low Discount-Sources-Shanghai Metals Market

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KGHM Offer Oversubscribed, Low Discount-Sources

Industry News 09:33:20AM Jan 08, 2010 Source:SMM

WARSAW (Reuters) - Poland's offer of a 10 percent stake in Europe's No. 2 copper producer, KGHM (KGHM.WA), was oversubscribed on Thursday, sources told Reuters, as the country took its first step to raise at least $8.8 billion from asset sales this year.

The sources familiar with the offer said Poland's treasury ministry, which oversees state assets, would price the stake at about 103 zlotys per share, a 5.5 percent discount to Wednesday's closing price, to value it at some $720 million.

Traders and fund managers told Reuters earlier on Thursday that Poland hired several brokerages to sell the stake to investors.

The treasury ministry and the state-controlled miner declined to comment on the Reuters report, which helped pull the high-flying KGHM shares down as much as 5.2 percent to as low as 103.3 zlotys each.

The stock, which nearly quadrupled in price last year thanks to resurgent metal prices, closed the session down 4.5 percent at 104.1 zlotys in heavy trade.

The report also helped lower the yields on Polish debt as the move highlighted the commitment of the European Union's largest ex-communist member to limit its borrowing in 2010 with funds from asset sales, debt traders said.

The center-right government, which expects its budget deficit to balloon to 52.2 billion zlotys ($18.2 billion) in 2010, said last year it would sell as much as 10 percent of KGHM on the market in 2010, but retain control over the miner.

Talk of selling a larger part of Poland's 42 percent stake in KGHM sparked protests from its powerful unions, which fear that without state control the miner would slash costs and jobs.

The early move to unload the KGHM stake surprised some investors, but fund managers said the sale would likely be met with strong demand and would set a positive precedent for more difficult transactions in the coming months.

"The ministry picked a good moment for the sale," said one fund manager who asked not to be named. "There is a positive sentiment on the market -- the bourse had been rising for five sessions and surpassed a December high -- and copper is strong."

Fund managers had expected the sale price to be set at above 100 zlotys per share.

"The stake is big enough to be sold at a discount," said Sebastian Boguslawski, fund manager at Poland's largest investment fund, Pioneer Pekao. "The company is attractive enough to be able to sell it at a discount of about 5 percent."

Ewa Radkowska, a fund manager at ING PTE, said: "Interest is high and, besides that, the price had already included the expectations of the sale of the state stake. So I wouldn't expect a large discount."

Analysts estimate that as much as $14 billion of new shares will flow onto the Warsaw stock market in the coming months, including state stakes in utilities Enea and Tauron, as well as the region's top insurer, PZU.
 

Key Words:  copper Cu  finance raising   KGHM 

KGHM Offer Oversubscribed, Low Discount-Sources

Industry News 09:33:20AM Jan 08, 2010 Source:SMM

WARSAW (Reuters) - Poland's offer of a 10 percent stake in Europe's No. 2 copper producer, KGHM (KGHM.WA), was oversubscribed on Thursday, sources told Reuters, as the country took its first step to raise at least $8.8 billion from asset sales this year.

The sources familiar with the offer said Poland's treasury ministry, which oversees state assets, would price the stake at about 103 zlotys per share, a 5.5 percent discount to Wednesday's closing price, to value it at some $720 million.

Traders and fund managers told Reuters earlier on Thursday that Poland hired several brokerages to sell the stake to investors.

The treasury ministry and the state-controlled miner declined to comment on the Reuters report, which helped pull the high-flying KGHM shares down as much as 5.2 percent to as low as 103.3 zlotys each.

The stock, which nearly quadrupled in price last year thanks to resurgent metal prices, closed the session down 4.5 percent at 104.1 zlotys in heavy trade.

The report also helped lower the yields on Polish debt as the move highlighted the commitment of the European Union's largest ex-communist member to limit its borrowing in 2010 with funds from asset sales, debt traders said.

The center-right government, which expects its budget deficit to balloon to 52.2 billion zlotys ($18.2 billion) in 2010, said last year it would sell as much as 10 percent of KGHM on the market in 2010, but retain control over the miner.

Talk of selling a larger part of Poland's 42 percent stake in KGHM sparked protests from its powerful unions, which fear that without state control the miner would slash costs and jobs.

The early move to unload the KGHM stake surprised some investors, but fund managers said the sale would likely be met with strong demand and would set a positive precedent for more difficult transactions in the coming months.

"The ministry picked a good moment for the sale," said one fund manager who asked not to be named. "There is a positive sentiment on the market -- the bourse had been rising for five sessions and surpassed a December high -- and copper is strong."

Fund managers had expected the sale price to be set at above 100 zlotys per share.

"The stake is big enough to be sold at a discount," said Sebastian Boguslawski, fund manager at Poland's largest investment fund, Pioneer Pekao. "The company is attractive enough to be able to sell it at a discount of about 5 percent."

Ewa Radkowska, a fund manager at ING PTE, said: "Interest is high and, besides that, the price had already included the expectations of the sale of the state stake. So I wouldn't expect a large discount."

Analysts estimate that as much as $14 billion of new shares will flow onto the Warsaw stock market in the coming months, including state stakes in utilities Enea and Tauron, as well as the region's top insurer, PZU.
 

Key Words:  copper Cu  finance raising   KGHM