TGK-7 Announces Range for Secondary Sale at a Premium

Power producer TGK-7 has set the price range for its secondary share offering at 2.80 to 2.95 rubles, a premium to market prices, the company said Monday.

Pricing for the public offering is expected March 12.

TGK-7, which owns 21 power stations in central Russia, is selling 12.87 percent of its expanded share capital both at home and on foreign exchanges through an issue of Global Depository Receipts.

In April or May, TGK-7's parent company Unified Energy System plans to sell the government's stake in TGK-7, totaling 54.47 percent before its shares are diluted by the new share sale.

Viktor Vekselberg's holding Integrated Energy Systems, or IES, which owns roughly 23 percent of TGK-7, said last week it would bid for the entire offering at roughly $450 per kilowatt of capacity and aims to gain control of the group.

Analysts said that, based on the current market price of 2.576 rubles per share of TGK-7, a fair value for the company would be about $440 per kilowatt.

The Federal Anti-Monopoly Service said Friday that it had permitted IES to acquire TGK-7 and another power producer, TGK-6.

But to prevent IES from monopolizing the power market in the regions where these firms operate, the watchdog said IES would have to sell about 7.4 percent of their combined capacity, or 741 megawatts, equivalent to several power stations.

"The committed sale of some of TGK-6's and TGK-7's power plants implies additional risks for their minorities associated with the unknown price paid for these assets," analysts at Alfa Bank said in a research note.