May 26, 2022
S&P 500 4,058
10-Year Treasury 2.76%
Gazprom (OGZPY) $1.10 trading currently banned
Dear Clients and friends,
Gazprom (OGZPY) Update:
May 26, 2022 ($1.10) Follow up discussion with Bank of NY:
I mentioned that we do not, nor have a means to really surrender our shares. We know of no legal way to open an account that would accept Russian ordinaries. Bank of NY basically mentioned, we really have no practical choice, other than wait. They could in theory sell the shares in August 2023, but he doesn’t expect that to happen. Bank of NY could offer no opinion as to what his inner thoughts or expectations on this are. Bank of NY did mention a lot of portfolio managers will just wait it out, be it a month, a year, 10 or 20 years. We are certainly in that camp, and really what choice do we have.
Bank of NY said each share of OGZPY is convertible into 2 shares of ordinary. Bank of NY owns the respective number of ordinary shares. Ordinary shares are selling for 271.40 RUB, and the current exchange rate is .0164. Hence a share of OGZPY would be worth $8.90 per share if liquidated now at the current Russian price (271.40 X 2 X .0164).
May 2, 2022 ($1.10) Discussion with Bank of NY custodian of Gazprom ADR’s and GDR’s:
Bank of NY basically indicated that because of sanctions here, and forcing this from Russia, that there is little to nothing to be done. Bank of New York owns the stock, and the ADRs have them as value. Yet, nothing tradeable, so kind of meaningless. Could take years to settle, or Russia could nationalize the company, and we would be worthless. I asked Bank of NY for gut feeling, and he said it is beyond gut. BKNY is in a quagmire, but nothing that could be done about it. Just must see how this plays out in years to come, and hopefully we don’t end worthless. Bank of NY said in all his years, and his colleagues’ years, they have never experienced anything close to this. In 2020 USA forced sales of certain China Securities. Bank of NY said that was fair and seamless. This time, forget it. I asked what would best case scenario be? Bank of NY said that Putin no longer in charge, mending gets made, and business at some point returns to normal. Bank of NY was very specific that he doesn’t expect that, yet he has no idea what to expect. I tempered their real words.
Again, we fully stand by the country and the people of Ukraine.
REDFIELD, BLONSKY & STARINSKY, LLC
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