Korea's KEPCO is ready to buy the generation company's blocking stake South Korean energy company KEPCO (Korea Electric Power Corporation) is ready to invest USD 500 million in the Russian power industry in the near future. According to its CEO Lee Won Gu quoted by Reuters, such is the worth of the 26% interest in one of Russian generation companies that KEPCO intends to purchase. Last night the South Korean side confirmed that the company in question is Territorial Generation Company No.4 (TGC-4) and specified that the amount of its investments will be in the range between USD 500 million and 1 billion. Territorial Generation Company No.4 (TGC-4) comprises 26 power plants and 663 boiler houses in 11 regions of Russia's central part with an installed electric and heat capacity of 3,323.8 MW and 17,809 GCal/h correspondingly. Gas accounts for over 98% of the company's fuel mix. More than 47% of the company's shares is owned by RAO UES of Russia. Its large minority shareholders include Prosperity Capital Management fund (19.2%) and offshore company Immenso Enterprises Limited (over 7%) that belongs to controlling shareholder Novolipetsk Steel (NLMK). The company's CEO Lee Won Gu did not elaborate on what asset he had in mind. However last night, KEPCO reported that the company in question is TGC-4. A KEPCO representative speaking with Reuters referred to plans to spend from USD 500 million to USD 1 billion on the deal. A source close to the energy holding company has told RBC Daily that a memorandum of understanding between RAO UES and KEPCO signed last September included, inter alia, plans to bid for TGC-4. "The company may not negotiate selling interest or disclose information on potential investors," RBC Daily has been told by the generation company. Analysts do not rule out the possibility of the Koreans bidding jointly with the current minority shareholder, Prosperity Capital Management. "Prosperity is TGC-5 main strategist, but they are a portfolio investor and may well admit KEPCO as a partner," believes Dmitry Terekhov of Antanta Capital Investment Company. Yesterday Prosperity was not available for comments on the Koreans being interested in TGC-4. The fund has earlier stated its intention to take part in the generation company's additional share issue to preserve its stake of 19.2% as a strategic partner. It was RAO UES of Russia Management Board Chairman Anatoly Chubais who first mentioned the South Korean company as a potential investor in the Russian power engineering during his September road show abroad. Late last month, the company's management made public its intentions to buy stakes in the Russian generation sector. At the same time, the company's chief executive Lee Won Gu signed a cooperation agreement with Russia's Ministry of Industry and Energy. Czech company CEZ has also indicated its interests in TGC-4. It has recently confirmed its intention to bid for the generation company's additional share issue. The Czechs already have joint projects with TGC-4. Last August, the latter's Board of Directors approved a memorandum on basic terms and conditions of setting-up a joint venture for construction of new facilities. It should be noted that CEZ is interested in building a new 400-420 MW combined-cycle plant on the basis of the SDPP. Vasily Konuzin of Alemar Investment and Finance Company believes that CEZ is the optimal strategist for TGC-4. "The company has completed all procedures connected with liberalization of the East European market and accumulated sufficient experience to conduct business, including operations under transitional conditions," he argues. According to Konuzin, CEZ is closer to TGC-4 both geographically and mentally, since the Koreans are a new player unfamiliar with specific features of the market, the reform and the pricing principles in the transitional period. However, he does not rule out the possibility of the Koreans coming out victor. |
