Daily analyst comments

Eleven regional grid companies (RGCs) are to be folded into IRDGC Center in Q208, the company said in a press release. In November-December 2007, UES’s BoD is to address reorganization parameters for RGCs and IRDGCs, including the share swap ratios. EGMs of RGCs and IRDGCs to address a merger of regional grid companies and increased charter capital of IRDGCs are slated for Q108.

FSS is expected to register reports on the results of the additional share issues in May 2008. Thus, as early as in July 2008, trading in IRDGC Center shares could get under way on the stock market.

Belgorodenergo, Bryanskenergo, Voronezhenergo, Kostromaenergo, Kurskenergo, Lipetskenergo, Orelenergo, Tambovenergo, Smolenskenergo, Tverenergo and Yarenergo are to be folded into IRDGC Center. This company will become one of the largest inter-regional distribution companies.

According to our estimates, market cap of IRDGC Center once the consolidation is wrapped up, will be at least $2.29 bln. At present, we view as the best option to enter the charter capital of IRDGC Center to Buy into Lipetskenergo commons, Tverenergo prefs, Voronezhenergo prefs and Bryanskenergo prefs.