MSE borrowed US$14.2 million for UK expertise from 6 commercial banks

On April 7 2011, Chairman D.Sugar of the State Property Committee and Mr. Xavier Rolet, Executive Director of LSE, signed on the Master Plan of developing the Mongolian Capital Market and MSE, according to the Strategic Partnership Agreement with LSE (London Stock Exchange), made by the State Property Committee. Mr. Kh.Altai, Executive Director of MSE informed that US$ 14.2 million was paid in order to implement the agreement, borrowing from 6 commercial banks of Mongolia.

The loan was provided by Xacbank, TDB, Khanbank, Ulaanbaatar, Golomt and State Banks with annual interest of 6.5%. Upon the implementation of this master plan or starting from the third year, MSE will start trading of currency, commodity, and derivatives such as options, futures, indexes and mortgages. UK team also promised to provide possibilities of dual listing (registration) and custodian services. MPs of the Standing Committee of Economy were quite frustrated with the loan of $14.2 million without consent of SGK.

After short session of information, MPs asked some questions and are as follows:

MP Ts.Bayarsaikhan: According to the Mineral Law of Mongolia, 10% of the strategic deposits shall be traded at MSE. How many companies are abiding this provision why those many companies, which are selling their shares at foreign market, can’t trade their shares at MSE? What is the problem with that?

D.Bayarsaikhan, Chairman of the FRC: Baganuur, Shivee-Ovoo shares are traded at MSE out of 15 deposits and TT share trade is being prepared. There are 26 companies made IPO at the foreign market based on the Mongolian projects. Due to out-dated technology and facility of MSE and lack of proper regulations, stock trading faces some difficulties. As the result of the cooperation with LSE, such difficulties will be solved.

MP R.Bud: Why OT LLC doesn’t offer its shares? When the face value of TT share will be set?

D.Bayarsaikhan, Chairman of the FRC: FRC will urge them to abide the law. As for the face value of TT share, there are certain difficulties and working group is closely working on it. The State Property Committee expects TT IPO within this year or not later than the first quarter of 2012. Certainly, its face value will be set before that. I think it will be set within this year, because once the face value is set, then the secondary market kicks off.

MP D.Terbishdavga: Mongolian companies prefer foreign market to raise fund. Mongolia pays US$14.2 million to LSE. Who will pay back the loan?

Kh.Altai: We made a loan agreement with 6 banks, as stated in the Government protocol. The loan will be paid by the state budget. This fund will be decided by the budget modification. As for now, MSE has such profitability to this amount back. If MSE becomes international stock exchange, then it will be possible. LSE made an offer to own share after the certain period of management or to be fully paid for its service, and we chose the second option. As for MSE privatization, SGK hasn’t made any resolution yet.

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