SPF Declares Starting Prices for POON, LVON Privatization

Andriy Portnov, acting chair of the State Property Fund said yesterday that the starting price for the privatization of a 25%+1 stake in Poltavaoblenergo (POON: U/R) is USD 127.1 mln and for the privatization of a 26.98% stake in Lvivoblenergo (LVON: U/R) is USD 109.9 mln. Poltavaoblenergo’s stake will be offered for sale in one lot on the Ukrainian Interbank Currency Exchange tomorrow. Lvivoblenergo’s stake is scheduled to be sold on the Innex Stock Exchange Thursday. Alexander Paraschiy: These two privatization tenders were cancelled last Wednesday, by order of Valentyna Semenyuk-Samsonenko, former head of SPF, supported by President Yushchenko. UICE and Innex have recalled announcements about cancellation of the tenders. As we wrote earlier, privatization of stakes in six Ukrainian electricity distribution companies, including Poltavaoblenergo and Lvivoblenergo is under threat to the conflict of Yushchenko and Tymoshenko, who is supported Portnov. Starting prices for the stakes in the both companies are in line with our expectations (see our May 8 note). Poltavaoblenergo’s starting price yields EV/S of 2.5x, EV/EBITDA of 23x and EV/Electricity of 180 USD/MWh. Lvivoblenergo’s starting price yields EV/S of 2.7x, EV/EBITDA of 40x and EV/Electricity of 120. Multiples represent a premium to comparable deals in CEE: EV/S of 0.9x to 2.1x, EV/EBITDA of 6x to 12x and EV/Electricity of 46 to 104 USD/MWh.