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. Last Updated: 07/27/2016

Yevstafyev Picks Up the Reins at Mosenergo

Itar-TassMosenegro`s new head Arkady Yevstafyev took over on Tuesday.
Arkady Yevstafyev settled into his new office as head of Mosenergo on Tuesday as a battle over control of the electricity supplier showed some signs of abating.

The longtime ally of UES chief Anatoly Chubais faces an extraordinary shareholders meeting in a few weeks that will decide whether Unified Energy Systems gets to keep its candidate at the helm or whether the post should go to somebody else. Alexander Remezov, the ousted director and favorite of Moscow Mayor Yury Luzhkov, appears to be out of the running.

Analysts gave a big thumbs up to the shakeup, predicting a new management would probably bring UES-heralded reforms to Mosenergo.

Mosenergo's board of directors appointed Yevstafyev as general director Friday. He moved into his new office Monday after court bailiffs effectively removed Remezov from the building. Mosenergo security refused to let in Yevstafyev, who most recently was Remezov's deputy in charge of public relations, forcing bailiff guards to break into the office.

Yevstafyev is perhaps best known for an incident during then-President Boris Yeltsin's re-election campaign in 1996 when he was caught carrying half a million dollars in cash out of the White House. At the time, Yevstafyev handled public relations for Chubais.

The source of the cash was never established,?but Chubais conceded that the money was raised to finance Yeltsin's presidential race. The money went to pop stars hired to perform at concerts staged as part of the campaign.

Yevstafyev appears to be getting a warm welcome from the market, which had been vexed by the fight between UES and Remezov.

Renaissance Capital said Tuesday it was upgrading its recommendation for Mosenergo from "hold" to "buy" following Remezov's "definitive ouster."

"This signals that the battle between UES and the Moscow city government over the replacement of the Mosenergo CEO is nearing conclusion ... allow[ing] management to refocus on the company's operations," the brokerage said in a research note.

Andrei Abramov, an analyst with NIKoil, which is also recommending Mosenergo as a long-term buy, said the ouster would no doubt prove beneficial for the company.

He said Remezov statements on company strategy had disappointed investors, he said. For example, Remezov named supplying the city with heat as one of the top priorities. Investors would have preferred to hear a more ambitious strategy, such as the transformation of Mosenergo into an unrivaled leader on the regional electricity market, he said.

Abramov said it was a logical move for UES to appoint its own man at Mosenergo since it is, after all, the controlling shareholder, while the city of Moscow owns a minor stake. Also, shareholders can now hope that a long-awaited plan for UES restructuring will be adopted at Mosenergo, he said.

Remezov, meanwhile, is not giving up the fight. He met Tuesday afternoon with Moscow Deputy Mayor Boris Nikolsky, Remezov's spokeswoman Raifa Islamova said. She said Nikolsky told Remezov that the city would stand by him.

Luzhkov once again lashed out at Chubais over the ouster Tuesday. A day earlier, he promised to appeal to Prime Minister Mikhail Kasyanov.

Moscow has threatened to sue UES for its multibillion-ruble debt to the utility. Remezov also plans to file suit, Islamova said.

UES remains unworried. The holding has said it would reregister Mosenergo in the Moscow region if need be.