|
The Dalsvyaz telecommunications company has delayed spinning off its cellular assets until next summer; a step which seems logical and timely. Otherwise, the company would have had to sell the assets at an unjustifiably low price amid the turbulence of the financial crisis. In so doing, the company will also avoid making a buyout offer for USD 28 million worth of its shares.
Dalsvyz has postponed holding an EGM from October 30, 2008, to June 10, 2009, pursuant to a board decision. The meeting was supposed to approve the planned spinoff of cellular assets into a separate legal entity for its subsequent sale.
The delay will allow shareholders that voted against the spinoff, or who were absent from the general shareholders meeting, to present their shares under a buyout offer. The company offers to pay RUB 73.52 per common share and RUB 61.75 per preferred share. On October 13, the common shares were quoted at RUB 35.25 per share and preferred shares at RUB 23.5. The company would thus spend RUB 728 million, or USD 28 million, overall, which would negatively affect its financials.
We are upbeat about this decision, as it would be reckless to conduct the buyout of shares at an unjustifiably low price and at a difficult time on the financial market. The sale of cellular assets would not make it possible to determine their fair price, due to the frozen market.
Our valuation model took into account the company’s plans to sell off its cellular assets in 2008. The delay in the sell-off will have a tangible impact on the price of shares. In view of this, we have opted to put our estimate of the company’s shares under revision.
|
Far East Telecom
Capitalization: $80 205 886,23
Common shares:
Price: $0,65
Target price: $2,60
Recommendation: Buy
Delta week: -1,2%
Delta month: -3,6%
Delta year: -88,3%
Preferred shares:
Price: $0,58
Target price: $1,90
Recommendation: Buy
Delta week: 0,5%
Delta month: -8,3%
Delta year: -87,0%
|
0.569
0.073
