Shareholders in Russian real estate company Raven Property (RAV) may lose the entirety of their investment after the firm called to de-list its shares.
The company argued the impact of sanctions ‘have made it impracticable for the business to continue in its current form’.
The shares, which had already lost nearly 90% of their value before today’s announcement, were suspended before the London open at the company’s request.
TOTAL WRITE-OFF
Raven owns an investment portfolio of around 1.9 million square metres of top-grade warehouse space in Moscow, St Petersburg, Rostov-on-Don, Novosibirsk and Nizhny Novogorod.
The firm said it had entered into an agreement to allow it to divest of its Russian operations to a Cypriot company to be owned and controlled by Raven’s Russian management team.
The transaction is structured as a put option which allows it to dispose of the entire issued ordinary share capital of Raven Russia (Holdings) Cyprus Limited, which owns the Russian assets, to its management ‘for nominal consideration’.
The board says it believes this to be ‘the most effective way to meet any further sanction and counter sanction requirements’.
As a result of the transaction, the Board proposed that the listings of the company’s shares be cancelled not just in London but in Moscow and Johannesburg as well.
That leaves UK shareholders staring at a total loss of their investment if they cannot sell their shares. At their peak of nearly 37p in November the firm was valued at over £200 million.
REASSESSING RISK EXPOSURE
Today’s news will be a blow to major investors Quilter (QLT) and Schroders (SDR), who own 23.5% and 11% of the company respectively according to data compiled by Bloomberg.
It will also no doubt trigger an across-the-board reappraisal of the explicit and implicit risks of owning Russian stocks.
Most UK firms which operate in Russia have said they have ceased trading there, but there has to be a question mark over the value of their Russian assets and whether there is any chance of operations re-starting.
The Russian economic ministry said last week it had drawn up plans to seize the assets of Western companies who had quit the country in retaliation for sanctions.
The government has already passed a law to impound $10 billion worth of jets leased to Aeroflot and other Russian airlines.
