October 1, 2008, was the last date when the purchaser of OGK-1 (RTS: OGKA), Roskommunenergo, could finalize the deal. However, no information about the deal has been made available so far; therefore, the transaction will most likely not be completed. In line with media comments, Roskommunenergo and its partner, Dubai World, do not hold any information on the deal; neither does OGK-1, which is now searching for alternative ways of financing its investment program.
OGK-1 is the only genco where UES failed to hold an additional issue prior to the energy holding’s wind-up. This complicated the implementation of the OGK-1 investment program, since the additional issue should have been a partial funding source for the investment program. It was supposed that the strategic investors would purchase both the additional issue and the state share package in the company, owned by the state as a UES shareholder. As a result, after the UES liquidation, the state share package in OGK-1 went to FGC (43%) and RusHydro (23%). On the last day of UES existence, Anatoly Chubais said that he had signed a unilateral agreement with Roskommunenergo to sell off OGK-1 at USD 516 per 1 kW, or RUB 2.6 per share. However, the transaction has been delayed several times since then because of the due diligence procedure.
There is really no logic in purchasing OGK-1 at USD 516 per kW, since the average market price per 1 kW of established capacity for wholesale generation companies is USD 100 per kW, even though OGK-1 is the only genco in Russia without a strategic investor. There are actually three possible scenarios: Firstly, the selling price for OGK-1 may be reduced. Secondly, control over the genco may be acquired by the state through a state bank. Thirdly, the company may draw concessional debt financing from state banks and perform an additional issue after the situation on the financial markets becomes stable. In our view, the third scenario is most likely. In any case, we do not expect any lucrative offers to be made in the mid-term. OGK-1 shares are now free from any speculation-driven premium and may come down considerably under the influence of current market conditions.
The fair value of OGK-1 (RTS: OGKA) is USD 0.038 per share, which corresponds to a BUY recommendation.
0.569
0.073
