Luganskteplovoz To Be Privatized By The End Of June.

Last Friday the State Property Fund started preparations for the privatization of Luganskteplovoz. The starting price for the state’s 76% stake will be announced on Wednesday, SPF officials currently value the stake at USD 250-300 mln, ~1.5-2 times higher than the USD 98 mln, set in the privatization list the SPF submitted to the government in February. Concorde Capital: A starting price of USD 250 implies a share price USD 1.4 – 2.8 times higher than the share price, and P/S of x3 and P/EBITDA of x41 expected in 2006. The market has not reacted to the announcement of a privatization date and is waiting for the deal to be completed. We believe that either of the presently known bidders – Transmasholding or Finance&Credit will manage to boost LTPL value by bringing the inflow of badly needed working capital and new orders to increase the company’s capacity utilization, presently at ~17%.