DTEK Expresses Interest in Dniproenergo and Donetskoblenergo

At a press conference yesterday, Maxim Timchenko, the CEO of the Donbas Fuel and Energy Company (DTEK), the vertically integrated company controlled by SCM, announced that it is considering the acquisition of state-owned stakes in Dniproenergo (DNEN: HOLD) and Donetskoblenergo (DOON: BUY).DTEK holds 43% in Dniproenergo and 25% in Donetskoblenergo. Alexander Paraschiy: Timchenko’s statement officially confirms our view on DTEK’s interest in Donetskoblenergo, (see our 2007 January 2008 note). We believe that DTEK strengthening its position in Donetskoblenergo will help the company improve its operating and financial results and resolve its debt problem by restructuring outstanding payables. DTEK’s presence in Dniproenergo will allow the company to secure coal supplies and price competitiveness on the wholesale market.