Dniproenergo Privatization To Take Place By October 31?

Ukraine’s Cabinet of Ministers, in a resolution published yesterday but dated March 26, 2008, set a deadline for the privatization of Dniproenergo (DNEN: HOLD) at October 31, 2008. The Cabinet plans to sell 2.35 mln shares, or 60% of the company according to the resolution. The rest of state’s stake (0.63 mln shares or 16% of old shares based on the number prior to the recent charter fund increase) are to remain in state hands. Alexander Paraschiy: The Cabinet’s resolutiondemonstrated that the government is ignoring the additional share issue, approved by Dniproenergo’s AGM on August 27, 2007, which effectively diluted the state’s 76% stake to 50%. The question of the additional share issue is not closed yet: Supreme Court hearing on its validity is scheduled for April 8, and there is high probability that the issue will be recognized as valid. If so, the stake the government plans to privatize would dilute to 39.4%. Under this scenario, the government will have to revise its privatization plan. Nevertheless, we continue to believe that privatization of generation companies is unlikely in 2008.