Russian hydroelectricity company #RusHydro announced it would sell its entire stake in #InterRAO energy holding (4.92 percent) to its subsidiary Inter RAO Capital. RusHydro’s board of directors has approved the sale of the stake for RUB 17.2 bn. This price is 15.1 percent below the six-month weighted average for a similar stake at the Moscow exchange. Last week, federal grid company FSK sold its 10-percent stake in Inter RAO for the same price.
The deal between RusHydro and Inter RAO Capital has not been closed yet, a source close to Inter RAO told Vedomosti. Once it is finalized, Inter RAO quasi treasury stake will increase to 30.09 percent, making it the largest shareholder. Rosneftegaz will remain the second largest shareholder with a 27.63 percent stake.
According to Russian joint stock companies law, if the share exceeds 30 percent, the owner is obliged to make an offer to buy out shares from other shareholders at the price of the latest deal or the six-month weighted average, whichever the highest.
However, Inter RAO plans no public offer to minority shareholders. The company announced that its subsidiary, OOO Praktika, bought 0.67 percent of Inter RAO shares from FSK. “The deal envisages a payment deferral for more than a year with ownership change upon the payment”, the Inter RAO spokesman said. This means Inter RAO Capital has no property rights for the stake and the quasi treasury share is still below 30 percent, which means the company is not obliged to carry out a buyback from minority shareholders, he adds.
According to MOEX, 29 percent of Inter RAO shares are in free float and the company’s capitalization was RUB 422.7 bn as of 3 June.
Its largest minority shareholders are BNP Paribas SA (2.02 percent), BlackRock Inc (1.14 percent), and JPMorgan Asset Management (0.46 percent). Their representatives provided no answers to Vedomosti questions.
“RusHydro can spend RUB 17.6 bn it will receive on partial debt repayment (RUB 101 bn as of end Q118 and capex (RUB 90 bn annually). The company is expected to be free cash flow negative until 2020 amid new construction projects”, Natalya Porokhova, an ACRA analyst, said.
Inter RAO’s quasi treasury stake can be sold to “a large international strategic investor or a group of financial investors with potentially larger free float or other deals”, the company reports.
“Inter RAO managed to agree on the buyback with a discount, which means greater growth potential for the share price. The company will now be looking for foreign investors”, says Fyodor Kornachev, an analyst at Sberbank CIB.