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Russia’s Pharmacy Chain 36.6 receives approval to sell nearly 90 million shares


MOSCOW Pharmacy Chain 36.6, Russia’s largest pharmacy chain, has been given the go-ahead to sell 85.5 million common shares as it works to fund expansion and repay debt.

“It is positive news. The money got by the enlarging of the authorized capital will be directed to business development and credit repayment that will promote the strengthening of our leading positions at the market and further profitable growth,” said Artem Bektemirov, CEO of Pharmacy Chain 36.6.

The board of directors will determine the additional share emission price after expiration of the priority rights.

A recent news report stated that JPMorgan Chase analyst, Elena Jouronova, estimates that the company would need $150 million in “fresh capital” in 2009 to meet debt obligations.

On Dec. 2 when the company released its most recent financial results president Jere Calmes stated, “We achieved some noteworthy successes over last year in our Q3 results. In the latest reporting period, we have successfully sold a portion of our closed end real estate fund, which improved our Q3 net profit result and reduced our debt. In the retail unit, we were able to deliver a positive EBITDA on the back of a healthy recovery in our gross margin and a significant reduction of SG&A as a percentage of sales. However, the current business environment remains extraordinarily tenuous and operational results are being negatively impacted. The company’s management is working with the board of directors to find solutions for financing the business through these difficult times and will continue to focus on addressing working capital needs and streamlining operations.”

Named after the ideal body temperature in Centigrade for healthy adults and children, 36.6 broke the mold when it introduced the Western-style, open format pharmacy in Russia in 1997. During the Soviet era, pharmacists operated from behind glass and no beauty products were sold in pharmacies.

After six years of building the brand, the company, whose roots technically date back to 1991 when it was a small pharmaceutical wholesale company, made headlines in 2003 when it became the first retail company to do an initial public offering. The IPO raised $14.4 million, money that enabled 36.6 to expand its store base and fund new initiatives.

Today, the company has nearly 1,200 pharmacies in 29 Russian regions and employs more than 11,000 people. Consolidated sales in 2007 were about $872 million.

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