Russian 'Oligarchic Grouping' Seen Rumored Buying Up YeES Shares Ahead of Reform
CEP20021202000333 Moscow Gazeta in Russian 02 Dec 02 P 9
[Report by Yekaterina Kats: "An Open Home Front: Deripaska, Abramovich, and Melnichenko Versus Chubays" -- taken from HTML version of source provided by ISP]
[FBIS Translated Text]
The bosses of YeES Rossii RAO [Unified Energy System of Russia Russian Joint-Stock Company] are concerned by a purposeful buying up of shares in the power holding company and its subsidiaries. Analysts claim a Russian "oligarchic grouping" already owns a 15-20% stake in the company's shares. The emergence of a new strategic investor cannot fail to affect the progress of reforming the monopoly.
Most traders believe suspicions of buying up the shares fall on Oleg Deripaska and Roman Abramovich. Andrey Melnichenko is allegedly also taking part. One analyst told Gazeta that several significant shareholdings in the company were bought through MDM Bank roughly one month ago. It was then that it became clear who was accumulating the stake.
YeES management body member Andrey Trapeznikov does not deny that "shares are being bought up in both the holding company itself and its regional subsidiaries." According to Trapeznikov, though, the company bosses do not know who exactly is buying up the shares.
Information about the composition of the owners of YeES shares will not become known before May, one month ahead of the next company shareholders meeting. It is by this time that the central depositary closes the register of shareholders and any of them can demand a copy. It is unlikely to clarify the real picture of who YeES belongs to, though: The register only reflects a nominal list of shareholders and it will still only be possible to guess at their relationship to Deripaska or Melnichenko.
Illarionov Plus Chubays
There are currently two mutually exclusive versions of how events have developed. The company itself is making a direct link between the buy-up of shares and the controversy that took place at the economic form in Boston in mid-November. Holding company bosses believe that the report made by Presidential Adviser Andrey Illarionov caused a crash in the prices of the company' shares. Foreign investors began to actively get rid of their ADRs [American Deposit Receipts], which played into the hands of those who are buying up shares in Russia.
RTS [Russian Trading System] trading data over the past period fits this version. Judging from the graph, the shares' active growth began on 11 November. At the time the shares cost 11 cents. Company Chief Anatoliy Chubays's report at the Boston economic form warmed investors' interest and the shares went up to $0.126. But immediately after Illarionov's speech they collapsed to $0.1177 by 20 November.
But the collapse was followed by a new growth that continued until the end of last week. Last Friday the share price came to $0.125. So at first sight the company bosses' version has convincing confirmation.
Troyka Dialog investment company analyst Lauri Sillantaka believes the controversy did indeed lead to Western investors beginning to dump their securities. But people on the market do not confirm that Illarionov's report played a substantial role in what is happening. And analysts have different assessments of the role of Illarionov himself.
"Speculators are discussing a different rumor -- that Chubays and Illarionov came to an arrangement and created a controversy in order to thus squeeze foreign investors out of the market," Metropol investment company chief analyst Andrey Bespalov laughs. "Illarionov's behavior toward the company leadership was so aggressive that even those foreigners that have a negative attitude toward restructuring began to suspect him." Bespalov himself does not believe the controversy was planned in advance, though.
Speculators Are Heating Up the Market
Traders are sure that the buy-up of YeES shares began back early this year when the share price had fallen to 7.5 cents. Last year the price reached 18 cents. Western portfolio investors began to dump their assets after the company's capitalization began to fall. And as there was no particular increase in the shares and problems arose with passage through the Duma of the raft of laws launching energy reform, foreigners are preferring not to risk investing in YeES securities. Illarionov's report could not have changed much about that, people on the market believe.
"The buy-up of shares is proceeding according to the same scheme as the buy-up of Sibneft did in its time. They bought up shares at 40 cents for eighteen months and it was only afterward that they shot up to $2," Bespalov believes.
The scheme that is being used allows us to draw the conclusion that what is happening is the work of one financial group. "When there are a few buyers, a battle begins and prices shoot up," Bespalov told Gazeta. "If there is one buyer, why should he drive up the price?" The analyst believes "prices have now reached levels at which buying can be slowed down." He is sure the shares' 43.5% increase over the last two months is mainly the work of speculators trying to heat up the market.
Chasing a Blocking Stake
The way events will go on to develop will depend on how many shares investors have already managed to buy up. Rumor has it that it is a question of 15-20%. "The people who are buying up the shares need 25%," an Alfa-Bank trader told Gazeta. "If the new strategic investor does not yet have a blocking stake, the buy-up will continue."
Most analysts are sure the shares are not being bought with the aim of speculating. "Portfolio investors would not buy so many. There is clearly a different aim here: To become the owners and this can only be welcomed," people in Alfa-Bank believe.
It is primarily a question of owning shares in the wholesale generating companies, which will include federal power stations belonging to YeES and which will become the main players on the future electricity market. After all, according to the government-backed mirror principle of dividing the company's property, after restructuring all the company's current shareholders will get the same stake in each wholesale generating company as they own in YeES.
It is unlikely that the new owners are only pursuing the goal of increasing the value of their assets at the end of reforms, though. They also have more immediate interests: Deriving profit and the enterprises they own getting free access to the federal wholesale market. The possibility is not ruled out that these objectives include buying up new assets. That is to say, precisely the thing against which the minority shareholders objected when they demanded the introduction of a moratorium of the removal of assets.
A Gazeta interlocutor believes that minority shareholders' position could worsen with the appearance of new owners as "their interests concern no one but them."
"Aside from the oligarchic group that has bought up shares, there are other oligarchic groups that will lobby for their own interests," Andrey Bespalov is sure. "No one wants to end up with a super-monopoly that will control half the country through power generation." Which means the future progress of reforms is becoming unpredictable.
[Description of Source: Gazeta -- Daily paper run by former Kommersant editor Shakirov and reportedly backed by metals magnate Vladimir Lisin and Western sponsors; not affiliated with the gazeta.ru website.]
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