The Russian Federal Antimonopoly Service (FAS) has rejected to grant an application made by KT Projects investment company to acquire 50.9% of Mosenergosbyt (RTS: MSSB) voting shares, reports FAS. The rejection was accredited to the unreliability of the information given in KT Projects' application and the fact that FAS failed to determine KT Projects' ultimate beneficiaries and sources of transaction financing. The FAS refusal will not allow KT Projects to become the owner of the energy retailer's control package. Since the term for payment of Mosenergosbyt's stocks expires on 19 June 2008, the energy retailer's share package will be transferred under a separation balance sheet to RAO Eastern Energy Systems holding, which is to make a decision on the resale of the securities.
FAS's rejection could produce negative impact on Mosenergosbyt's stock valuations, since KT Projects had intended to pay for the purchased shares and was to make a mandatory buyout offer to minority shareholders. The issue of Eastern Energy Systems' representation in Mosenergosbyt's BoD and its influence on the company's governance remains unclear. In our opinion, Mosenergosbyt's share package will be acquired within a year by Gazprom's Mezhregionenergosbyt holding, in conjunction with the Government of Moscow, but considerably below the value at which the package was sold at the last auction.
The fair value of Mosenergosbyt shares is USD 0.015 per share, which corresponds to Sell recommendation.
0.569
0.073
