AES mulls sale of two oblenergos
By Roman Olearchyk, Kyiv Post Staff Writer
Less than two years ago, U.S.-based AES was being vaunted as proof that the nation’s first round of oblenergo sales was a success after the company bought a pair of electricity generators.
Now, there are signals that the sole Western strategic investor in the country’s energy sector wants out, and that it may sell its stake to less transparent Russian and Ukrainian investors with existing holdings in the sector.
Growing debts, cash-flow problems and a dwindling stock price have compelled U.S.-based AES, an international electric power provider, to consider selling its less productive assets, including the two Ukrainian utilities.
AES bought the oblenergos through a subsidiary, AES Silk Road. The parent firm, claims to have assets exceeding $37 billion in 30 countries including the United States, the United Kingdom, Latin America and the CIS.
AES Silk Road paid $70 million for Kyivoblenergo and Rivneoblenergo during a privatization tender held during spring 2001. The tender was the first time controlling stakes in energy distributors had been put up for sale. AES’ arrival as a majority shareholder in the electricity distributors generated considerable excitement at the time, as it represented the first big Western investment in Ukraine’s energy market.
Now the company appears willing to dump both assets as part of a corporate restructuring plan designed to trim operating costs and boost its stock price.
Following weeks of rumors, a report in the Russian daily newspaper Vedomosti last week alleged that AES was in talks with Russian and Ukrainian firms with existing holdings in the country’s power markets.
Olena Kompanets, spokesperson for AES in Ukraine, would neither confirm or deny that talks were underway.
“This is just rumor,” she said. “I can not confirm or deny that the oblenergos are for sale, but there might be talks.”
Two independent, reliable sources have confirmed that talks are taking place, however. On condition of anonymity, both sources told the Post that AES has been in talks with businesses interested in buying its oblenergos.
“They are in talks right now with potential buyers using an intermediary firm which is representing their interests,” one source said, indicating that there is significant interest on the part of Ukrainian and Russian business groups.
Another source, affiliated with one of the holding companies involved in the talks, confirmed that negotiations are ongoing.
“There is a tender of sorts,” the source said. “Our group, and other Ukrainian and Russian investment holding companies already in Ukraine’s energy sector, have been in talks with a firm representing AES’ interests. The talks involve a preliminary offer to purchase both of AES’ oblenergos in Ukraine.”
According to the source, potential buyers include Energy Standard Group, headed by Ukrainian-born Konstantin Grigorishin, now a Russian citizen, and a Russian consortium fronted by Slovakia’s VSE, which purchased majority stakes in four other Ukrainian oblenergos during the 2001 privatization tenders.
State-owned electricity monopoly United Energy Systems of Russia is also a potential buyer, according to Vedomosti.
State Property Fund spokesperson Nadia Zalepa said that AES has not notified the fund that it is interested in selling its stake, but added that the agreement AES made with the government does not prevent the firm from selling.
“The sale is not prohibited as long as the new owner signs an agreement with the fund to take responsibility for the investment obligations guaranteed by AES,” she said.
AES reported a $313 million loss during the first quarter of this year. Its stock has tumbled from $16 per share in early 2002 to about $4 per share today.
In June, AES’ financial troubles triggered a reshuffle in senior company management. The company’s new senior management has promised to appease stockholders by generating cash through the sale of assets and stricter cost controls. The group has since sold off several major assets and is in talks to divest itself of others. |
