UES plans Mosenergo, OGK5 share issues; OGK4 buyback price approved
UES said yesterday it was planning additional share issues for Mosenergo and OGK5 in 4Q06, Interfax reported. Wholesale generating company OGK3 and regional generators TGK6, TGK8 and TGK9 are also preparing to issue shares in 1Q07, UES said.
UES management board member Alexander Chikunov said OGK5 plans to issue shares amounting to 25% of its capital, worth about $300mn, while the Mosenergo issue would be valued at roughly $700mn-$1bn. Approximately $300mn placements are planned for OGK3, TGK5 and TGK9, with $200mn-$300mn in the case of TGK8. The announced figures suggest the possible dilution of UES's stake in some companies (TGKs and OGK3) to below controlling level - de-facto amounting to the long-expected privatization; as such, the news is likely to meet with a positive reaction from the investment community.
Chikunov said ZAO Integrated Energy Systems (IES) and Primregionholding, a company affiliated with the management of Lukoil, were prepared to invest some $300mn in the development of TGKs in which they own shares. IES is the second biggest shareholder in TGK5 and TGK9 after UES, and Primregionholding will become the biggest minority in TGK8.
UES has instructed management to draft investment proposals for the use of the funds raised, Chikunov added. Sources told Vedomosti that UES CEO Anatoly Chubais will meet President Vladimir Putin on Feb. 8 in an attempt to win support for the plan. According to Vedomosti, Gazprombank is already in talks with UES to buy additional shares in Mosenergo, giving the company control over the utility. A source in Mosenergo told the newspaper the two sides had already reached an agreement in principle.
We remind investors that the government in December ordered UES to form a plan for separating two to four pilot generating companies (such as OGK-3, OGK-5, Mosenergo) by April 2006. Additional share issues were viewed as a possible approach along with the pro-rata split of gencos and direct sale of UES's stake in the companies.
We view the latest news as slightly positive as it indicates that UES has clarified its approach, and the tentative time schedule and deal sizes for the possible additional issues provide hope for the privatization of some generators including OGK3 and several TGKs. However, we believe the final decision on the additional issues - which is expected to be made by the government in 2Q06 - is still uncertain.
In other news, directors at the GRES plants that form OGK4 have approved the price at which they will buy back shares from shareholders who voted against converting their holdings for genco stock, Interfax said.
Following appraisals of the plants, the buyback price per Smolensk GRES common share has been set at R8.4356 and per pref at R7.7253. The price per Shatura GRES-5 common share is R0.0947; per Yaivinsk GRES common share R42.0659 and per pref R38.5240; per Berezovsky GRES-1 common share R10.4131 and per pref R9.5364. The figures are in line with the companies' current bid-ask quotes and as such provide no investment opportunity.
Separately, the BoD of TGK1 yesterday raised the company's 2006 net income forecast by more than 150% to R539mn ($19.2mn) due to a planned reduction in expenses, Reuters reported. The BoD also improved 2006 investments of R1.5bn ($53.6mn |
