Investors want HPPs to remain with Irkutskenergo


The company is going to lease three power plants at below market price

August 10
The Association of Institutional Investors (API) has recommended that the shareholders of Irkutskenergo vote against the 10-year lease of the Irkutsk, Bratsk and Ust-Ilimsk hydroelectric power plants to the company’s shareholder EuroSibEnergo-Hydrogeneration. The estimated price of the lease contract is 14.9 billion rubles per year net of VAT. “Irkutskenergo would earn approximately 113 billion rubles, the lessee about 260 billion rubles in projected net operating profit from lease (based on current prices),” the API’s letter notes.
Given the market environment, the contract price is indeed understated, Renaissance Capital analyst Vladimir Sklyar says. “For reference - TGC-1 has recently leased 90 MW for 1.6 billion rubles. With this in mind, 1 MW of leased capacity will cost EuroSibEnergo 10 times less,” the expert points out.
EuroSibEnergo-Hydrogeneration (previous name: Telmamskaya HPP LLC) is wholly owned by EuroSibEnergo, a company controlled by Oleg Deripaska’s En+ Group. In 2016, the company acquired 40.3% of Irkutskenergo shares from Inter RAO. Besides, EuroSibEnergo directly owns another 50.2% in Irkutskenergo.
The extraordinary general meeting addressing the lease of the power facilities is scheduled for August 25. However, the votes of minority shareholders may be unable to decide anything, since EuroSibEnergo is recognized as the only related party to the transaction, which will prevent it from voting its shares, while no restrictions apply to EuroSibEnergo-Hydrogeneration, the API’s letter emphasizes.
The lease of the Irkutsk, Bratsk and Ust-Ilimsk hydroelectric power plants is in line with EuroSibEnergo’s strategy to integrate its generating assets into a single corporate center. In 2015, the company leased the Krasnoyarsk Hydropower Plant.
The minority shareholders opposing EuroSibEnergo’s decision still can accept the stock buy-back offer, Sklyar reminded adding that the offer price is close to the market value so far, while there are no factors implying that Irkutskenergo securities may go up in price. The offer expires at the end of September. “A significant number of minority shareholders have already accepted the offer made by Telmamskaya HPP LLC and sold their holdings of Irkutskenergo shares,” EuroSibEnergo’s spokesperson commented.
By: Arthur Toporkov / Vedomosti

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