Dniproenergo Additional Share Issue To Boost CapEx Program?

Yesterday, Dniproenergo’s board of creditors approved the scheduling of an additional share issue for Dniporenergo (DNEN: HOLD). The company plans to issue 2.04 mln new shares (+52% of charter fund). The entire amount is most likely to then be exchanged for a 100% stake in a company with a charter fund of USD 208 mln created by two coal mines (main creditors of DNEN) affiliated with the Donbass Fuel and Energy Company (DTEK, the energy wing of SCM). As part of the deal, DTEK will also be obliged to invest USD 200 mln into Dnipronergo’s CapEx program. Alexander Paraschiy: As a result of the additional share issue, DTEK will increase its presence in DNEN by 34% at a cost of about USD 408 mln. This means the implied MCap of the deal is USD 1190 mln, which is a 27% discount to the company’s current MCap. As Dniproenergo had the weakest CapEx program among Ukrainian power generation companies, the inflow of USD 200 mln will definitely be beneficial for the company. The direct impact of the deal on minority shareholders is not immediately clear and we are expecting more details from DTEK in the near future.