Luhanskteplovoz Sold In Shady Tender

According to local media reports the state’s 76% stake in Luhanskteplovoz (LTPL: HOLD) was sold to Braynsk Heavy Machinery, part of Russia’s Transmashholding, for near the tender’s starting price of USD 57.9 mln. There were only four companies involved in the bidding: Bryansk Heavy Machinery, Demikhovski Machine Building (also part of Transmashholding), Dniprovagonmash and Privat Groups’s Marganets Iron Ore.  Inna Perepelytsya: According to our sources in LTPL, following a court ruling late last night, overturning the ban on LTPL privatization, the SPF went ahead with the tender.  LTPL was sold for only USD 100 ths more than the tender’s starting price. From our discussion  it was clear that LTPL’s management was happy to finally have been bought by Russian company, as this will likely in sure the flow of stable orders from Russia. However, the way in which this tender was held, without informing the investment community, certainly harks back to the Kuchma era and raises several red flags. When we spoke with the State Property Fund, they even joked that there was likely to be more legal battles.  We are currently in contact with Luhanskteplovoz and will be reporting more details as them come to light. The State Property Fund will be making an announcement shortly with more information about the sale.