storically, the relationship with Tadaz was that MiddleSex would supply the aluminium; it would pre-finance the processing and in return it would receive the aluminium which it would then sell in the international markets. The relationship worked profitably. However, throughout 1996, the political situation in Tajikistan deteriorated, trading cycles became longer and no deliveries were made in the last six months of 1996, leaving MiddleSex owned some US7.9m( 4.6m). MiddleSex believes it will recover this debt: it has already received US$2.4m( 1.5m) in late June 1997. Negotiations are well advanced to collect the balance.
During 1996 MiddleSex diversified its non-ferrous business into nickel. In October 1996 it entered into a short-term pilot contract with Napo Invest and Trade Corp., a company incorporated in the British Virgin Islands and run by Mr. Yuri Murkin, a business associate of Mr. Alikhani, and two Russian companies: Koks, which owns the Kemerovo coke plants and Kombinat Yuzhuralnikel, one of the biggest Russian nickel producers.
The government recently sold its 38% in troubled Norilsk Nickel, the biggest but also heavily debt-ridden Russian nickel producer. Following the Norilsk example, Yuzhuralnikel could be the next to be auctioned. Interfin, MiddleSexs 40% owned investment, has already secured a 14.7% interest in the Yuzhuralnikel nickel plant, which gives MiddleSex a 5.9% indirect interest.
Overall I believe that MiddleSex is in strong position if it decodes to increase its interest in
Yuzhuralnikel and therefore its Yuzhuralnikel exposure to nickel. However, I have assumed that MiddleSex will only extend the trading with Yuzhuralnikel.
The backbone of MiddleSexs financial services operations is the 40% owned Interfin (Interbank Investment and Finance Company). The remaining 60% is held by GAZPROM (20%), OEMK(20%) and Mapo Bank(20%). MiddleSexs financial services include:
- trading in Russian capital markets;
- financial advise to western companies or potential business in Russia, and
- advice to Russian companies entering western capital markets.
Established in late 1994, Interfin commenced by trading in Russian treasury. Initial returns were good and Interfin quickly made substantial profits, which enabled the company to start bying stakes in various Russian companies. As a result, Interfin has built an impressive asset base of which the company estimated to be in excess of US$300m.
MiddleSex - GAZPROM relationship
MiddleSex holdings - a small, London based trading group - is advertising the world biggest producer and Russias biggest company GAZPROM on cheaper ways to raise finance. The appointment came as a result of the close contact between MiddleSexs and Interfins top management and GAZPROM. Principally the role consist of :
- Providing independent advice in relation to the selection and implementation of different fund raising strategies and regulatory requirements of international capital markets;
- Liaison with advisors, once appointed, on behalf of GAZPROM as well as coordination of GAZPROMs fund raising and corporate activities;
- Assisting in the design and implementation of special project finance schemes and structured long-term program of public and investor relations aimed at strengthening GAZPROMs position in the international capital markets.
In returns for its services MiddleSex receives fees, depending on the type of service provided, and determined by GAZPROMs board, plus the reimbursement of its expenses in connection with travel, presentation and other expenses.
If relation with GAZPROM maintained, and GAZPROMs current financial restructuring and capital raising plans are carried out, I think this is the one of the most important step for MiddleSex holding, and they are well positioned to benefit and generate significant returns.
To sum up then, taking a closer look at the Annual reports of the companies just confirming what I have researched through different types of magazines and newspapers, as well some official reports of the company. Through out the official statements it is crystal clear that company had a very big boost when Massoud Alikani has arrived and restructured the company almost completely, as well as brought some past experiences idea from the time he worked in Russia.
Then the company had another big growth in 1996 when the steel trading became the flagship operation and they started to work with OEMK.
1. Guardian newspapers;
2. Financial Times newspapers;
3. Newsweek magazine;
4. Economic Research (russian);
5. MiddleSex Oficial Financial Statements .