At 10% higher than the market value RAO UES of Russia has determined the price of Kuzbassenergo (Territorial Generating Company No 12, TGC-12) shares for the forthcoming additional issue at 75 roubles per security. This is 10% higher than the market value. The principal minority shareholder of the company, OJSC Siberian Coal Energy Company (SUEK), agrees to the price, but does not intend to buy out all shares. Experts believe that RAO UES may not find any other contenders for the power company. RAO UES yesterday recommended the Kuzbassenergo board of directors voting for the price of one share of the company for conducting the additional share issue in the amount of 75 roubles. The vote occurred yesterday, but its results will be announced later today, according to the holding company. RAO UES added that the decision to set the price at 75 roubles was based on recommendations from the consulting banks, offers from Kuzbassenergo shareholders willing to exercise their right of first refusal to purchase additional issue shares, and discussions with SUEK, the second largest shareholder of the power company. Offers from investors will be accepted until December 13, and the placement of the additional share issue will be completed on December 14. TGC-12 (Kuzbassenergo) consists of Kuzbassenergo and Altaienergo. Its installed capacity amounts to 4,448 MW for electric power and 8,706 Gcal/h for heat. The majority shareholder is RAO UES (49%), and 43.4% belongs to SUEK. Yesterday, the price of one TGC-12 share in the market amounted to 67.7 roubles per share or $377 per 1 kW of installed capacity, whereas the price proposed by RAO UES is $420. The additional share issue of the company is expected to amount to 14.1% of its capital. Besides, a government-owned stock of 18.6% is to be sold. However, this will not occur simultaneously with the additional share issue. The government stock is expected to be sold next year because "its sale requires a decision of the government which has not been passed as yet," explains RAO UES. RAO UES intends to earn around 9 billion roubles on the placement of the additional issue. As a rule, the holding company sells government stocks in wholesale generating companies (WGCs) and TGCs at the same price per share as when it places their additional issues. SUEK deputy director general Sergei Mironosetsky told Kommersant that the company yesterday filed an offer to exercise its right of first refusal to buy out additional issue shares and that it agrees to the price of 75 roubles per security. In order to maintain its interest in TGC-12 at the present-day level SUEK will have to buy out approximately 44% of the additional issue for 3.3 billion roubles, according to the top manager. "So far, we see no point in buying out the rest of the additional issue and the government's stock," specified Mr Mironosetsky. "Perhaps, we will change our mind, but control is enough for us for the time being." As a result of the exchange of RAO UES shares for TGC-12 shares after the holding company's reorganisation, SUEK will gain control in the generating company. "We hope that we will be able to buy those hundredths of a per cent that we will need to have a controlling interest from other RAO UES minority shareholders who will receive their proportional interests after the reorganisation," noted the top manager. He considers it the most appropriate option if the government stock were sold as part of an IPO, but doubts that RAO UES will approve of such an option. Kuzbassenergo is a promising company, "just like coal generation in general," in the opinion of Matvey Tayts of Uralsib Investment Company. The analyst believes that the fair price of TGC-12 is much higher than the market price and amounts to 158 roubles per share. "However, hardly anyone, except SUEK, will be interested in purchasing these shares until the assessment and the founding mechanism are known for the joint venture of Gazprom and SUEK to which TGC-12 shares will be contributed," believes Mr Tayts. Ekaterina Tripoten, an analyst with Sovlink Investment Company, also doubts that portfolio investors will be interested in purchasing Kuzbassenergo shares at the price proposed by RAO UES. "They have no reason to pay extra when they can purchase at a lower price in the market," says Ms Tripoten. She notes that the attempt to use the same mechanism for selling WGC-2 shares did not come off well (see Kommersant, October 1) and the placement of shares of that company where Gazprom is the majority shareholder has not been completed to date. |
