IES was unable to come to an agreement with Gazprom on the 5% acquisition of a stake in TGK-5 (RTS: TGKE) purchased by the gas giant in the first stage of UES restructuring in September 2007, it was reported. It has also been confirmed that IES currently owns less than 30% in TGK-6. Negotiations with Gazprom are currently ongoing in TGK-7.
IES currently owns nearly 45% of TGK-5, but plans to take control over the genco. Most likely, IES would not be able to purchase the lacking 5% share package at the market price or below the market. If IES establishes control over the company, i.e. exceeds the 50% threshold, it will become obliged to present a buyout offer to the genco’s minority shareholders. Even if the offer is made at an average market price for the last 6 months, this value will exceed the current market valuations. Therefore, IES should not hurry with package acquisition.
It was also clear from Mikhail Slobodin’s comments that IES’s stake in TGK-6 did not exceed 30%, but the company intended to gain control over this genco, as well. TGK-6 largest minority shareholder is Prosperity Capital Management, which bought out TGK-6’s additional issue jointly with IES. The companies’ share holdings have not been disclosed yet. As of today, IES managed to gain control over TGK-7 by consolidating nearly 55%-65% of the genco’s shares; however, UES has granted delays in payments for the state share packages in TGK-6 and TGK-7. Therefore, we do not expect buyout offers to be presented for these two gencos in the near future. We are also skeptical over negotiations between Gazprom and IES on TGK-7. In our opinion, the companies will fail to come to an agreement, and IES will act as an independent strategist in TGK-7. Additionally, the holding’s offer to TGK-9 shareholders has recently expired. As a result, IES’s stake in the genco exceeded 75%. Note that, pursuant to the current legislation, the offer will not be made in this case. Therefore, we do not see any appealing investment ideas among the gencos held by IES.
The fair value of TGK-5 (RTS: TGKE) is USD 0.00071 per share, which corresponds to a BUY recommendation.
The fair value of TGK-6 (RTS: TGKF) is USD 0.0007 per share, which corresponds to a BUY recommendation.
The fair value of TGK-7 (RTS: TGKG) is USD 0.06625 per share, which corresponds to a BUY recommendation.
The fair value of TGK-9 (RTS: TGKI) is USD 0.00029 per share, which corresponds to a HOLD recommendation.
0.569
0.073
