Mostotrest BoD Approves Decision to Increase Interest in TSM
OREANDA-NEWS. JSC Mostotrest (hereinafter - Mostotrest or the Company, and together with its consolidated subsidiaries - the Group, MICEX-RTS stock ticker: MSTT) announces that on January 31, 2013, its Board of Directors approved acquisition of 25.9% in Transstroymekhanisatsiya (hereinafter - TSM) and exit from Engtransstroy Corporation (hereinafter - ETS). At the same time, the value of the 25.9% stake in TSM is estimated to be RUB125.8 million higher than the value of the 51% stake in ETS. Upon completion of the transaction Mostotrest will have increased its shareholding in TSM to 76%, while effectively stepping out of ETS.
In recent years, Mostotrest has been actively implementing a strategy driven by the market trend towards consolidation and increasing technical complexity of transport infrastructure construction projects, which called for a broader set of contractor competences. Indeed, Mostotrest had resolved to acquire the complex project management expertise, while pursuing further development of its own production capacity. As part of this strategy, the Company acquired a 51% stake in ETS and a 50.1% stake in TSM in 2010, which along with organic development enabled Mostotrest to become the largest diversified player in Russia, with a broad geography of operations and presence in all key market segments. In addition, ETS' competence in complex transport infrastructure construction project management has been successfully integrated into Mostotrest and TSM, which are now jointly implementing a number of complex projects, including construction of the Kurortny Avenue Relief Road in Sochi, Voronezh and Vyshny Volochek Bypass Roads, the 15-58 km section of the Moscow - Saint Petersburg Toll Highway, successfully combining general contractor functions with own production capabilities. As a result, the presence within the Group of a general contractor with no production capability lost its relevance.
Mostotrest CEO Vladimir Vlasov comments on the transaction: "In today's market of ever more complex projects and increasingly fierce competition, general contractors can efficiently implement projects only if they have their own modern production capability and qualified workforce, which provide control over execution quality and timeline. TSM, with its own production infrastructure, including manufacturing of construction materials, its highly skilled professionals and modern equipment, has successfully transformed itself from a subcontractor into a company able to autonomously manage large complex projects. We are looking forward to increasing our interest in TSM, which together with Mostotrest creates a balanced business platform to participate in project of any complexity and in any region".
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