ETLN.L Regulatory News (ETLN)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR THE RUSSIAN FEDERATION

This announcement is an advertisement and not a prospectus for the purposes of Directive 2003/71/EC (together with any applicable implementing measures in the relevant home member state under such Directive) (the "Prospectus Directive"), and investors should not subscribe for or purchase any GDRs referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") to be published by Etalon Group Limited in due course in connection with the Offering (as defined below) and Admission (as defined below).

In any member state of the European Economic Area that has implemented the Prospectus Directive this communication is only addressed to and directed at persons who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors").

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, (i) Qualified Investors who are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i) and (ii) above together being referred to as "relevant persons"). Any invitation, offer or agreement to subscribe, purchase or otherwise acquire any securities will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Persons distributing this document must satisfy themselves that it is lawful to do so.

Information contained in this document is not an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities in Russia or to or for the benefit of any Russian person, and does not constitute an advertisement of any securities in Russia. This information must not be passed on to third parties or otherwise be made publicly available in Russia. The securities have not been and will not be registered in Russia or admitted to public placement and/or public circulation in Russia. The securities are not intended for "placement" or "circulation" in Russia except as permitted by Russian law.

These materials are not an offer for sale of securities or solicitation to purchase or subscribe for securities in the United States. The Securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act"). Such securities may not be sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the Securities Act. The Company (as defined below) does not intend to register any part of the offering in the United States or to conduct a public offering of such securities in the United States.

ETALON GROUP LIMITED PRICES INITIAL PUBLIC OFFERING AT US$7 

15 April 2011. Etalon Group Limited ("Etalon Group" or the "Company"), one of Russia's largest residential real estate developers with a 23 year track record, today announces the price (the "Offer Price") for its initial public offering (the "Offering") of ordinary shares (the "Ordinary Shares") in the form of global depository receipts (the "GDRs") to be admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange's Main Market under the ticker ETLN ("Admission"). One GDR represents an interest in one Ordinary Share of the Company.

§ The Offer Price has been set at US$7 per GDR.

§ The Offering comprises 82,142,857 Ordinary Shares of the Company in the form of GDRs, equivalent to US$575 million at the Offer price.

§ Strata Investments, which is beneficially owned by Viacheslav Zarenkov and persons related to him, has granted to the Joint Bookrunners an over-allotment option to acquire up to 12,321,428 additional Ordinary Shares in the form of GDRs for the purposes of meeting over-allotments in connection with the Offering (the "Over-allotment Option"). The Over-allotment Option is exercisable for a period of 30 calendar days from today.

§ The Company will sell 71,428,571 newly issued Ordinary Shares in the form of GDRs, and entities beneficially owned by Gazprombank Asset Management, Baring Vostok, the Zarenkov family and other members of management (the "Selling Shareholders") will sell 10,714,286 existing Ordinary Shares in the form of GDRs, not including those to be sold by Strata Investments pursuant to the exercise of the Over-allotment Option. This will represent a free float of approximately 28% post new share issue and prior to exercise of the Over-allotment Option.

§ The gross proceeds to the Company from the sale of newly issued Ordinary Shares in the form of GDRs are expected to be US$500 million. The Company intends to use approximately 70% of its share of the net proceeds of the Offering to finance the acquisition of new land plots. The Company intends to use the remaining 30% of its share of the net proceeds for general corporate purposes, including the construction costs of new and existing projects.

§ The gross proceeds from the sale of existing Ordinary Shares by the Selling Shareholders are approximately US$75 million.

§ Following the Offering, the total number of shares in issue will be 294,957,971. The Offer Price implies an equity value for the Company of US$1.6 billion prior to new share issue and US$2.1 billion post new share issue.

§ Conditional dealings are expected to commence on the London Stock Exchange today under the ticker symbol ETLN. Admission and commencement of unconditional dealings are expected to take place on 20 April 2011.

§ Prior to publication of the prospectus in accordance with the Prospectus Directive, further information about the Company and the GDRs is available from the Company on request. For further information, contact Pavel Dupin - +44 (0)20 8123 1328.

§ Following the transaction there shall be a lockup period of 180 days for the Company and participating shareholders.

§ Credit Suisse, Renaissance Capital and VTB Capital have acted as Joint Global Coordinators and Joint Bookrunners in connection with the Offering.

Commenting on the Offering, Viacheslav Zarenkov, Chairman of Etalon Group, said: "The positive response to the Offering is a real endorsement of Etalon Group's business, the markets in which it operates and the strength of its management team. The Offering is another important milestone in our long history and will allow us to build on the solid platform for growth that we have already established. We will now put the proceeds to work in acquiring new projects and expanding operations in our key markets in order to capitalise on the attractive opportunities in the sector. We look forward with confidence to our future as a public company and to delivering value to all shareholders, both new and old alike."

For further information:

Financial Dynamics - Financial Public Relations Adviser

ABOUT ETALON GROUP

§ Etalon Group is one of Russia's largest residential real estate developers. Since its original inception in 1987, the Company has built a leading position in the St. Petersburg Metropolitan Area, where it has recorded an 11% average annual market share of total residential completions in the private sector (excluding individual constructions) between 2000 and 2010. It also has a growing presence in the Moscow Metropolitan Area market.

§ Etalon Group has a strong portfolio focused on large-scale residential complexes, targeting the lower middle class and upper economy class price segments, providing high quality living at affordable prices. The Company primarily focuses on the development of high-rise residential complexes constructed using poured concrete technology. The defining feature of Etalon Group's residential developments is the construction of entire estates, often integrated with social infrastructure, including kindergartens, schools and hospitals.

§ The Company's portfolio comprised 28 development projects, as of 31 December 2010, with a total of 3.13 million sqm of unsold net sellable area ("NSA") in the St. Petersburg and Moscow Metropolitan Areas. The Company's two largest projects by size are the 868,034 sqm NSA Emerald Hills development in the Moscow Metropolitan Area and the 601,758 sqm NSA Jubilee Estate development in the St Petersburg Metropolitan Area.

§ For the year ended December 31 2010, the Company recorded revenues of RUB 20.3 billion (USD 669 Million) and EBITDA of RUB 6.9 billion (USD 227 Million), with an EBITDA margin of 34%. For the years ended December 31, 2008 and 2009 revenues were RUB 14.3 billion (USD 574 million) and RUB 20.2 billion (USD 636 million), respectively. Over the same periods, the Company produced EBITDA of RUB 3.2 billion (USD 128 million) and RUB 7.6 billion (USD 239 million), as well as EBITDA margins of 22% and 38%, respectively.

§ Etalon Group is a vertically integrated development company, which operates selective businesses in areas critical to its core residential property development activities, including production of construction materials and tower crane operation. The Company also operates a nationwide marketing and sales network, which substantially expands its potential customer base.

§ The Company's strong and experienced management team, under Viacheslav Zarenkov, has been fundamental to Etalon Group's success. The key members have served in their capacities since inception in 1987, and the average service of the members of the senior management team is over ten years.

Any purchase of GDRs in the Offering should be made solely on the basis of the information contained in the Prospectus and the pricing statement to be issued by the Company in connection with the Offering. Copies of the Prospectus will, following publication, be available from the Company's registered office at Ogier House, St. Julian's Avenue, St. Peter Port, GY1 1WA Guernsey. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information in this announcement is subject to change.

The timetable of the Offering, including the date of Admission, may be influenced by a range of circumstances such as market conditions. There is no guarantee that Admission will occur, and you should not base your financial decisions on the Company's intentions in relation to Admission at this stage. Acquiring GDRs to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering making such an investment should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the Offering. The value of GDRs can decrease as well as increase. Potential investors should consult a professional adviser as to the suitability of the Offering for the person concerned.

Credit Suisse and VTB Capital, each of which are authorised and regulated in the United Kingdom by the FSA, and Renaissance Capital (acting through its Cyprus based entity which is authorized and regulated by the Cyprus Securities and Exchange Commission), are acting exclusively for the Company and no-one else in connection with the Offering. They will not regard any other person as their respective clients in relation to the Offering and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the Offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements speak only as of the date they are made.

Each of Credit Suisse, Renaissance Capital and VTB Capital and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

In connection with the Offering, Credit Suisse, Renaissance Capital and VTB Capital and any of their respective affiliates, acting as investors for their own accounts, may subscribe for or purchase GDRs and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such GDRs and other securities of the Company or related investments in connection with the Offering or otherwise. Accordingly, references in the Prospectus, once published, to the GDRs being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by Credit Suisse, Renaissance Capital and VTB Capital and any of their affiliates acting as investors for their own accounts. Credit Suisse, Renaissance Capital and VTB Capital do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

None of Credit Suisse, Renaissance Capital and VTB Capital or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of, the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith.

In connection with the Offering, Renaissance Capital, as stabilisation manager, or any of the agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot GDRs or effect other transactions with a view to supporting the market price of the GDRs at a higher level than that which might otherwise prevail in the open market. Renaissance Capital is not required to enter into such transactions, and such transactions may be effected on any stock market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings of the GDRs on the London Stock Exchange and ending no later than 30 calendar days thereafter. However, there will be no obligation on Renaissance Capital or any of its agents to effect stabilising transactions, and there is no assurance that stabilising transactions will be undertaken. Such stabilising measures, if commenced, may be discontinued at any time without prior notice. In no event will measures be taken to stabilise the market price of the GDRs above the offer price. Save as required by law or regulation, neither Renaissance Capital nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilisation transactions conducted in relation to the Offering.