On September 16, 2008, the Federal Service for Financial Markets registered an additional share issue by RusHydro (RTS: HYDR), to be sold to the Russian Federation on a closed subscription basis. The issue is made up of 4.3 billion shares, at about 1.7% of the company's registered capital. The additional shares are to be paid for in cash. The decision to boost the RusHydro capital was made on June 25, 2008. The new shares are to be placed at RUB 2.02 per share. As planned, the placement will be completed by January 15, 2009, at the latest. The company will direct the proceeds towards financing its investment program.
We are upbeat about the event, as the company intends to float its shares at more than double the price of its current stock valuations. The additional share issue, although not entailing an obligation for the state as a majority shareholder to make an obligatory buyout offer, will have a beneficial impact on the company's value, enabling it to reduce the shortage of funds for its investment program.
We estimate the fair value of one share in RusHydro (RTS: HYDR) at USD 0.13 per share, which corresponds to a BUY recommendation.
0.569
0.073
