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The Liquidation Margin

October 24, 2007 Kommersant

The holders of RAO UES of Russia will vote Friday for winding up the holding. Those, who disagree, may sell their stocks to RAO UES, which will hardly launch them on the market to cover the expenses. Instead, the Board of Directors of RAO UES will probably decide on re-selling the stocks to strategic investors that may generate up to 8 percent of them in the end. But RAO UES quotes soared on the market yesterday, and if the trend survives, the number of stocks presented for the buyout will be much less than expected.
RAO UES holders will meet for the EGM Friday to vote on the holding’s reorganization. At bottom, it will be the final formal step towards liquidation that is slated for July of 2008.

The holders that approve reorganization will get the stakes in generating and grid companies, which are the subsidiaries of RAO UES now. Those that disagree may present their stocks to RAO UES for the buyout. The initial plans were to sell them via the market in the next move, but the situation has changed recently.

It emerged that RAO UES has received some offers from potential buyers about making the delivery forward contracts for acquiring the stocks of RAO UES to be bought out from the holders. The BOD of the energy holding will focus on this issue same Friday. The respective contracts will be concluded and executed no later than on March 1, 2008.

The buyout price for RAO UES stocks will equal the market price but won’t be less than 32.15 rubles (RAO UES quote on RTS was 30.9 rubles as of 6:00 p.m. MSK yesterday). As to potential sellers, the sources say some portfolio investors were willing to sell the stocks to RAO UES and buy them back via the market, earning on the margin. But it looks like those stocks won’t reach the market at all.

Company — RAO UESR
  • Full name
    Open Joint Stock Company RAO UES of Russia
  • Registration country
  • Industry