The Federal Anti-Monopoly Service (FAS) is about to finalize its decision on a request from Transneftservice-S to acquire 50.9% of shares in Mosenergosbyt (RTS: MSSB). The agency has promised to make its decision before August 20, Interfax cited a FAS spokesperson as saying.
The request was submitted on May 19, 2008, prior to an auction for a share in Mosenergosbyt. However, the results of the auction were subsequently repealed after the FAS rejected a request from KT Projects, the auction winner, to buy a controlling interest in Mosenergosbyt, citing a lack of ownership transparency. Mass media reports cited Transneftservice S and its co-owners as the beneficiaries. This means that the auction for Mosenergosbyt was attended by a Transneftservice-S affiliate and Transneftservice-S itself. The date of a new auction for Mosenergosbyt is to be set by the Far Eastern Energy System BoD. The auction is to be preceded by a repeat assessment of the asset.
The repeat sale of Mosenergosbyt could be followed by a buyout offer to its minority shareholders. At present, Mosenergosbyt shares are priced more than 50% below their assessment value for the previous auction. However, rumor has it that a controlling share in Mosenergosbyt may not be sold. Instead, the shares might be renationalized or tendered in trust to a private company. The fact is that Mosenergosbyt renders services to numerous strategic companies and organizations, whose energy consumption levels are classified as a state secret. In this case, it is highly likely that the buyout offer would be recalled and the price of the shares would be based on the company's fundamental value.
Our target price for Mosenergosbyt (RTS: MSSB) is USD 0.014 per share, which corresponds to a HOLD recommendation.
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