IRKUTSKENERGO - 500 Beiträge pro Seite

[André K.]

IRKUTSKENERGO may finally come under UES ownership following a
court application by the Russian government to take control of a
40% stake, which has previously been managed by the local
administration. Inclusion in UES would force the hydroelectric
company to pay for use of power lines in the region, and could lead
to an alliance with local aluminium smelters (the Bratsk and Irkutsk
aluminium plants use 30% and 10% of Irkutskenergo output).
According to a report in Vedomosti newspaper, the generator is
ready to accept integration to UES despite years of antagonism,
because it needs UES muscle to force payment by local customers.

[André K.]

IRKUTSKENERGO will not be taken back by UES so soon, following a refusal by the Supreme Arbitration Court to accept a suit by the State Property Ministry. The Ministry wants to win a ruling making management of a 40% Irkutskenergo share stake by the Irkutsk local administration illegal, after which the company could be transferred to UES. The Court decision was based on a lack of correct documentation in the Ministry suit.

[André K.]

IRKUTSKENERGO looks increasingly likely to come under the control of UES after the Irkutsk governor, Boris Govorin, said that it is wrong that a large block of shares in one of the country`s major energy systems belongs to the province of Irkutsk instead of belonging to UES. Irkutsk authorities currently control 40% of Irkutskenergo.

[André K.]

IRKUTSKENERGO if being drawn into a battle with the Irkutsk
governor, Boris Govorin, who does not want the company to come
under the control of UES. Irkutskenergo management is now
reconciled to UES control as a way of resisting pressure by local
industry and the administration to keep tariffs artificially low
(tariffs in the region are the lowest in Russia at 9 kopeks (30 cents)
per kWh). Govorin has transferred half of the 40% stake, which is
controlled by the administration to a friendly private company in
order to make t harder to the State Property Ministry and USE to
contest vague agreements made several years ago on joint
federal-local management of the stake.

[André K.]

.
IRKUTSKENERGO will come under the control of UES or be controlled by the Irkutsk regional authorities and the Bratsk Aluminium Plant, depending on the outcome of an extraordinary shareholders` meeting on April 28. The Irkutsk authorities have put forward 12 candidates for the 11-strong board of directors. The local government recently transferred half of a 40% stake in Irkutskenergo to a friendly private firm (the stake is officially under "joint ownership" of the local and federal governments), and Bratsk Aluminium is believed to have acquired 22% of the company after a buying spree on the open market. Bratsk (a key customer of Irkutskenergo) and the local government want to keep the company`s output prices low. This has caused the company management, which controls 12% of shares, to side with UES and the federal government. Federal authorities, represented by the State Property Ministry, are also preparing a third application to the Higher Arbitration Court for return of all of the 40% "joint" stake to federal control. The Court has rejected two applications by the Ministry in recent months.

[André K.]

IRKUTSKENERGO tariffs will remain unchanged through 2000. According to the company, this is possible thanks to agreement by a local coal supplier to freeze its prices. However, the supplier accounts for only half of Irkutskenergo`s coal needs. The company also says that it has increased the share of its sales paid for in cash and cash surrogates (liquid veksels, etc.) to 70% of total sales.

[André K.]

IRKUTSKENERGO made a DM15.6m payment on its Eurobond on
April 20, representing a 12.5% coupon.

[André K.]

IRKUTSKENERGO managing director, Viktor Borovsky, failed to repeat the 1998 success of Anatoly Chubais by changing his company`s charter at a shareholders` meeting to make himself invulnerable to deposition by the state. The Irkutskenergo management requested shareholders at the EGM on April 28 to vote a change, which would have necessitated a two-thirds majority for replacement of the managing director. The amendment was not passed, leaving the company`s fate dependent on who will win the current battle for control of 40% of voting stock, which is owned by the federal government but controlled by the Irkutsk authorities. The State Property Ministry is seeking a court ruling to reassert full control over the 40% stake (12% of voting shares are controlled by management). The battle may be concluded at the AGM, which is due in the second half of June, and for which Irkutsk and Moscow have offered rival lists of board candidates. Irkutskenergo shares have been sluggish in recent months, trading at $0.093 on May 4, up 24% year to date and nearly double their 52-week low

[André K.]

IRKUTSKENERGO will not see any rapid change in its ownership
following the transfer by the Irkutsk regional authorities of a 20%
stake to the Ministry of State Property. The Ministry says its has no
plans to give the stake to UES or sell it off in the near future.

[André K.]

IRKUTSKENERGO holds its AGM on June 30. Managing director, Viktor Borovsky, said in an interview that the company should be able to control 25% of votes at the meeting, while Bratsk Aluminium holds 18%. Irkutsk regional administration and the State Property Ministry hold 20% each. Borovsky was highly critical of the regional administration, which he blames for trying to interfere in management of Irkutskenergo to advance interests of favoured companies in the region. He denied any conflict between Irkutskenergo and Bratsk Aluminium, which was suspected of buying up shares in the energo to force privileged prices for power. Borovsky said that Irkutskenergo remains completely opposed to integration into UES since "we have different positions on the subscription tariff [for grid use], and we are against the restructuring program, worked out by the holding."

[André K.]

IRKUTSKENERGO appointed two representatives of UES to its board by a vote of the AGM on June 30. The Irkutsk regional administration lost its representation on the board since it was prevented from voting a 20% stake, which it controls, due to court proceedings instigated by the State Property Ministry for recovery of control over the stake. The two UES board members were voted by another 20% of shares, which the Ministry has already received back from the Irkutsk administration. The outcome of the board meeting and management hostility to the Irkutsk governor suggest that UES is on track to regain full control of Irkutskenergo, which is the second largest Russian regional utility after Mosenergo and is the only utility independent of UES. The AGM decided to pay dividends of R1.65 per share for 1999.

[schloss]

Zur Ergänzung:

Die Dividende für das Jahr 2000 soll auf RR 2,00 angehoben werden

mfg
Schließer

[André K.]

IRKUTSKENERGO shares have grown by 42% since the start of June in
a buying spree, which seems to be organized by a single big
purchaser. The most likely candidate is the Bratsk Aluminum Plant,
which has over 10% Irkutskenergo stock officially and nearer 20%
via affiliates. Bratsk, now part of the shadowy Berezovsky aluminum
monopoly, which sprang up earlier this year, may be interested in
building a blocking stake in its energy supplier, Irkutskenergo,
ahead of expected assumption of control over the company by UES
and its traditionally anti-Berezovsky CEO, Anatoly Chubais.

[André K.]

Irkutskenergo reduced production of electricity by 3.7% in the first half of 2000 and saw a worsening of finan-cial
results compared with the same period last year. Net profit from January to June fell by 13.7% in ruble
terms compared with 1999.
Electricity production by Irkutskenergo in H1 2000 totaled 26.3 kWh, down by 1kWh from the same period last year. The
fall was due to a reduction in hydro-generating, which fell from 23.1 kWh in the first half of 1999 to 21.35 kWh this year.
Despite the contraction in generation, there was an increase in useful electricity supplied to consumers from 20.68 kWh to
21.19 kWh, which gave a 6.3% increase in profit from sales. The 13.7% shrinkage of the bottom line was largely due to a
Eurobond coupon payment of DM 15.6m in April this year

[André K.]

Irkutskenergo power struggle drags on
The outcome of the fight for control of 40% of Irkutskenergo remains unclear after a court failed to deliver a ruling on
August 9. The root of the conflict is most probably an attempt by aluminum makers to win control of the energo and cut
their power costs.
Irkutskenergo is currently the only regional energy com-pany,
which is not a part of UES. Its biggest shareholders
are the State Property Ministry (20%), the Central Com-pany
of the East-Siberian Financial Industrial Group (20%),
which is affiliated to the regional administration of Irkutsk,
foreign investors (26%) and Russian investors (26.7%). Re-maining
shares are held by individuals.
Irkutsk failed to be included in UES because it was set up as
a joint-stock company prior to the presidential decree,
which set up UES. The previous governor of the Irkutsk
region signed a special agreement with the federal govern-ment
ordering that 40% of Irkutskenergo would be under
the joint control of the Russian government and the Irkutsk
administration, and that any change in the status of power
assets in the region must be agreed with the administration.
This situation has been destabilized in recent months. The
company management requested the government to clarify
exact ownership rights of the 40%, which is in supposed
joint federal-regional control, and the government ordered
the State Property Ministry to take action on the issue. In
December 1999 the SPM submitted an application to the
Supreme Arbitration Court for transfer to federal control
of the whole of the 40% "joint" stake, which was in fact en-tirely
controlled by the regional administration. The court
agreed to consider the application. The Irkutsk administra-tion
meanwhile agreed to transfer half of the disputed stake
(20%) to federal control, but the SPM insisted on transfer
of the whole of the stake. This application was due to be
judged on August 9, but the court sitting did not occur.
It is possible that the court has been lobbied by the Irkutsk
administration, although administration representatives
deny this. Ludmila Berlina, the deputy head of the admini-stration,
said on Monday that its right to control at least
20% of Irkutskenergo is enshrined in solemn agreements
with the federal center and the legal position of the admini-stration
is therefore strong in any case.
The conflict over control of Irkutskenergo flared up at the
end of last year, and one version links it to a conflict be-tween
the company`s management and the Irkutsk admini-stration.
Preparing for this year`s AGM, the administration
refused to include the name of the current managing direc-tor,
Viktor Borovsky, in a list of candidates to the board,
nominated by the state, and in a list of candidates for the
job of CEO, which Borovsky currently occupies. However,
the administration failed to win the election of a single one
of its candidates to the board or to remove Borovsky at
the AGM. Therefore it is implausible to see the application
to Moscow by company management for clarification of
ownership rights as a way of fighting off the regional ad-
ministration. Also, management is strongly opposed to
transfer of control over Irkutskenergo to UES, which would
almost certainly follow if the SPM took the 40% stake.
The traditional hostility of company management to control
by UES has several causes. It would mean the end of Irkut-skenergo`s
status as a blue-chip stock, and an end to the
company`s plan to organize power exports to China. In
view of this, the reasons, which have persuaded managers
to seek federal protection and accept probable control by
UES, must be very weighty,
Possible explanations have included need for UES support
in extracting cash from non-paying customers, and prob-lems
securing fuel supplies, Neither of these explanations
are convincing: UES has even more serious problems with
payment collection than Irkutskenergo, and most of the
company`s power is generated by hydro facilities, making
fuel problems insignificant.
A clue to the real reasons for reduced opposition to con-trol
by UES can be found in comments by Berlina: "third
parties may be buying up shares in Irkutskenergo, taking
advantage of the current situation". The third parties in
question are most probably the new owners of the Bratsk
Aluminum Plant, which consumes 30% of all power gener-ated
by the energo and is experiencing problems due to
power supply contracts that were made in dollars before
the 1998 financial crisis, and do no expire until 2003. If
Bratsk could win control of Irkutskenergo, it could break
off these highly disadvantageous contracts. Since Bratsk
came under the control of Russian Aluminum, the new
corporation set up by Boris Berezovsky and Roman
Abramovich, it has the muscle to bid for control of the en-ergo.
Some reports suggest that Bratsk already controls 18% of
Irkutskenergo and if the aluminum makers could obtain
some or all of the disputed 40% they may well be able to
take complete control of the company. The current strug-gle
is most likely a result of the confrontation between
generators and aluminum makers.