SPF Hopes for USD 500-600 mln from Sale of 25%-27% in Six Oblenergos

According to Dmytro Perfenenko, deputy head of the State Property Fund, the SPF plans to raise UAH 2 to 3 bln (USD 0.5-0.6 bln) from the privatization of Oblenergos. He also stated that most probably the privatization tenders would be held in May 2008. According to the other deputy head of the SPF, Alexander Potimkov, the exact date of the tenders will be announced in 1.5 months, and will take place 30 days later. According to him, the SPF will hold an open auction at its office. The Cabinet of Minister’s decree puts the deadline for privatization of the six Oblenergos at June 1, 2008. Alexander Paraschiy: We believe the SPF’s estimates of privatization proceeds are realistic.The list of Oblenergos includes: Odesaoblenergo (ODEN: SELL), Prykarpatoblenergo (PREN: HOLD), Lvivoblenergo (LVON: U/R), Chernihivoblenergo (CHEON: U/R), Poltavaoblenergo (POON: U/R) andSumyoblenergo (SOEN: N/R). For the first five Oblenergos, the total market price of stakes subject to privatization is USD 410 mln. Sumyoblenergo has been delisted, but we can expect the SPF will relist the stock on the PFTS in the nearest future to have a benchmark for its price at tender. Preparations for privatization could be a liquidity booster for PREN, CHEON, POON and LVON – we put recommendations on these stocks under review. As we wrote before (refer to our note of January 17, 2008), privatization raises dilution risk at ODEN – we keep our SELL recommendation unchanged.