UES has scheduled the open auction to sell off its share in Bashkirenergo (RTS: BEGY), 21.27% of the charter capital, for May 23, according to the materials published on the energy holding’s website. A single package of 232,448,336 common shares is to be put at up for auction at the initial price of RUB 11 bn. In accordance with the market valuations, this package costs RUB 10.98 bn, and the package’s fair value estimated by Finam is RUB 13.26 bn. Bids are to be accepted from 12.05.2008 till 19.05.2008.
Bashkirenergo is one of the largest regional energy systems in Russia. Its established capacity for electric energy production is 5.13 GW, established capacity for thermal energy production is 17.39 Tcal per hour. The largest Bashkirenergo shareholders apart from UES are Bashneft, 11.63% of the charter capital, Novo-Ufimsky Oil Refinery, 11.63%, Ufimsky Oil Refinery, 11.63%, and Ufaneftekhim, 12.98%, which are controlled by the Bashkir government.
Since the auction winner is not to receive the blocking package, and the Bashkir government structures currently hold a nearly control stake, we believe that UES’s share package would be acquired by a Bashkir government structure, while strategic investors are not likely to show any considerable interest in the auction. As there would be no offer, this news is neutral for Bashkirenergo’s stock valuations.
Our recommendation for Bashkirenergo shares is Buy, with a target price is USD 2.41 per share.
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