August 7, 2018 / 4:51 PM / 3 months ago

UPDATE 1-Russia's Sibur examining capital market options - CEO

(Adds more CEO quotes, background)

By Oksana Kobzeva

MOSCOW, Aug 7 (Reuters) - Russian petrochemicals producer Sibur is examining various options on capital markets, its chief executive told Reuters on Tuesday, while declining to confirm concrete plans for an initial public offering (IPO).

Financial market sources told Reuters last month Sibur was preparing an IPO that could raise $2-$3 billion and potentially take place by the end of the year.

“We are considering the different options on the capital markets as and when necessary. Now it’s to early to say about the concrete plans,” Dmitry Konov said in an interview, without detailing the options.

Businessman Leonid Mikhelson, the head of and a major shareholder in Russia’s largest gas producer Novatek, owns 48.5 percent of Sibur, which is the largest petrochemical producer in Eastern Europe.

Mikhelson’s business partner Gennady Timchenko owns 17 percent, while China’s Sinopec and Silk Fund control 10 percent each.

A source familiar with the matter told Reuters last month that Mikhelson might sell part of his stake, while Timchenko and another shareholder, Kirill Shamalov, both subjected to U.S. sanctions, were likely to retain their shares.

Shamalov owns 3.9 percent in Sibur.

Given most of Sibur’s revenue is made in U.S. dollars, Konov said the largest part of the firm’s debt should also be denominated in the currency.

He said capital spending was peaking in 2018 as construction works at a petrochemical complex in western Siberia, known as ZapSibNefteKhim, were expected to be completed in May 2019.

The installation and start-up works need to be done before ZapSibNefteKhim, which will be one of the world’s five biggest petrochemical plants, is due to come on stream, he added.

Sibur is considering building a second big plant, known as the Amur Gas Chemical Complex (GCC), and may make a final decision at the end of 2019, Konov said.

According to the company’s web site, Amur GCC will have a capacity of 1.5 million tonnes per year of ethylene, to be further transformed into polymer products.

Sibur said last month investment in this plant could total up to $8 billion and it was looking to share the cost with partners from Asia.

The company said on Tuesday its first-half core earnings rose 18.7 percent year-on-year, helped by higher liquefied petroleum gas prices.

Revenue rose 21.6 percent to 257.7 billion roubles ($4.1 billion), lifted mainly by its midstream business.

$1 = 63.4796 roubles Reporting by Oksana Kobzeva; Writing by Tom Balmforth and Denis Pinchuk; Editing by Mark Potter

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