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Slovakofarma places GDRs on foreign markets

Slovakofarma, a.s. Hlohovec, the largest pharmaceutical company in Slovakia, announced on October 13 a successful placement of its global depository receipts (GDR) on international markets, becoming the first fully private Slovak company to raise funds this way.
Each GDR has a face value of 1/15 of an ordinary share which carries voting rights, and is transferable to shares. A total of 4.95 million GDRs were issued, representing 330,000 of Slovakofarma shares, or 19 percent of the company's registered capital with voting rights.
The issue was administered by Nomura International, a London-based investment bank well known for its activities on emerging markets, especially in Central and Eastern Europe and particularly in Slovakia. Besides the Slovakofarma GDR transaction, Nomura also manages the $250-300 million bond issue of the Slovak government, and recently announced a $120 million bridging loan for Slovakia's highway construction.

Slovakofarma, a.s. Hlohovec, the largest pharmaceutical company in Slovakia, announced on October 13 a successful placement of its global depository receipts (GDR) on international markets, becoming the first fully private Slovak company to raise funds this way.

Each GDR has a face value of 1/15 of an ordinary share which carries voting rights, and is transferable to shares. A total of 4.95 million GDRs were issued, representing 330,000 of Slovakofarma shares, or 19 percent of the company's registered capital with voting rights.

The issue was administered by Nomura International, a London-based investment bank well known for its activities on emerging markets, especially in Central and Eastern Europe and particularly in Slovakia. Besides the Slovakofarma GDR transaction, Nomura also manages the $250-300 million bond issue of the Slovak government, and recently announced a $120 million bridging loan for Slovakia's highway construction.

According to Michael Boardman, the Head of Equity Capital Markets at Nomura International, the GDR offering was so successful that the bank was able to fix the price at $9.60, very close to the top of the indicated $8.70-9.66 price margin.

Boardman said that demand was five times higher than supply, and that the transaction was viewed very positively by investors worldwide. "The important thing is that at least 40 percent of the buyers were good quality investors who invest on a 5 to 7 year basis," Boardman said. "You always focus on such investors when giving out GDRs."

The most important investors were pension and investment funds and insurance companies from the USA, Western Europe, and Asia, including Mercury Asset Management, Nomura Asset Management and J.P. Morgan Asset Management. As much as 90 percent of the investors were Nomura's old clients. Slovakofarma top management recently returned from the so-called "global roadshow program," doing presentations of the company and its long-term plans. According to Boardman, "their hit ratio [number of meetings held in respect to GDRs sold] was pretty high."

The company has also applied for its GDRs to be listed on the Luxembourg stock exchange, and intends to trade the GDRs on SEAQ International, Reuters and Portal. Slovakofarma thus became the first fully private Slovak company successfully to have placed its shares on an international stock exchange. The oil refiner Slovnaft a.s. Bratislava performed a similar operation two years ago, but was still partially state-owned at the time.

The issue brought Slovakofarma more than 1.1 billion Sk. "The transaction helped the company get rid of its loan burden that had resulted from the recent upgrade of production technologies," said Slovakofarma's Director General, Ondřej Gattnar. "In the future, we plan to keep our gearing ratio [of loans to equity] as low as 35-40 percent," Gattnar added.

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