Investment in Russia and Eastern Europe Message Board

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Strategies & Market Trends : Investment in Russia and Eastern Europe

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To: Michael Burry who wrote (166)	5/20/1998 3:03:00 AM
From: Thomas Haegin	of 1301

Michael, no problem: No, I'm not invested in LUKoil. I'm invested in Inkombank. I used to own the TRF fund, but decided to sell it last February because I thought the premium was not justified. The single best reason to invest in them probably is that ARCO decided they want to collaborate with them: Arco hold 8% of the shares and will committed some $4.5 bn to the joint venture (over a time of 18 years). They wouldn't do so unless they saw value in LUKoil. Other reasons why LUKoil is a good Russian investment: They are the largest vertically integrated oil company in Russia in terms of proven reserves, production and export sales and one of the largest in terms of sales of refined products. Their proven reserves are estimated at 11.2 bn barrels (on 06/30/97). I got these from the Convertible bond issue prospectus. Cash-flow is still a problem because in Russia, about half the business is settled via mutual debt setoff (you deliver me electricity and I deliver you oil). So actual hard currency is received mainly from the export business only. If I come upon more hard data, I'll let you know. Sorry, I know that there are many missing links. Thomas

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