Page 129 - RusRPTNov19

4.6% y/y, in the reporting quarter. While the lower output in 3Q19 was in line with expectations, given the frail electricity prices, it may result in a rather weak 3Q19 financials in year-on-year terms, BCS Global Markets commented on October 28.
RusHydro announced that its Board had approved the asset swap with SUEK on September 26 and the conversion of Far East Company’s intercompany debt into equity. As a result of the deal, SUEK is to get Luchegorsky coal mine and Primorskaya GRES by transferring its stake in Far East Company to RusHydro (which is to be approved by the Federal Anti-Monopoly Service). As for the second part of the deal, RusHydro has provided RUB 40.5bn of intra-company debt to Far East Company, out of the RUB 65.8bn of the latter’s total debt portfolio, so the intra-company debt conversion into equity would lower the debt by 60%. The deals are slated to be completed by the end of 2019.
Russian watchdogs could approve the deal between utility majors Fortum and Uniper within six months , as the corporate conflicts that have delayed the deal are believed to be resolved, Reuters reported on October 21 citing the Minister of Economic Development Maxim Oreshkin. As reported by bneIntelliNews, Finland'sFortumhas reachedanagreementtoacquire20.5% in German Uniper from hedge funds Elliott and Knight Vinke for €2.3bn, making it the largest shareholder in the company with 70.5% stake. Uniper, in turn, controls 83.7% in Russian utility major Unipro. "It is clear that behind this deal we had a corporate conflict between Fortum and Uniper that had now been resolved," Oreshkin is quoted as saying, noting that there were only technical issues to be resolved to approve the deal. The deal remains to be approved by Federal Antimonopoly Service (FAS), as well as US antitrust watchdogs, but Fortum expects the deal to be approved in 1Q20.
Enel Russia disclosed on October 2 that it had officially finalised the second stage of the sale of its coal-fired 3.8GW Reftinskaya GRES to SUEK . The company received a RUB 14.7bn payment on top of the RUB 2bn it received in August during the first stage of the deal. RUB 14.7bn is slightly below RUB 15bn guided earlier by the company on the back of the lower capex invested than was previously planned. The second stage was finalised on 1 October. Thus, the company has fully transferred ownership and is to remove the asset from its balance sheet. The third phase of the deal implies Enel Russia operating the power plant via a lease agreement (while SUEK is applying for licences and permits) and is due to receive RUB 4bn at the end, making a full deal value of RUB 20.7bn (not accounting for an additional RUB 3bn that could be paid on top if certain conditions are met).
Russia’s biggest foreign-owned power producer Enel Russia reported solid 9mo19 IFRS results and recommend a buy on the name despite the fact the company booked a small loss . The results were broadly in line with analyst expectations and the last to include the results from its coal burning Reftinskaya GRES power plant that the company sold on October 1. Enel Russia’s 9mo19 numbers were strong on an underlying basis, but distorted by the 2Q19 reclassification of Reftinskaya GRES as an asset for sale. Along with the slowdown of RSV prices in 3Q19 and a slide of almost 5% in production, the company posted revenues of RUB52,741mn for 9mo19, flat y/y and in line with the Bloomberg consensus. Fixed costs fell 14% y/y vs. flat variable costs y/y. Enel Russia recorded adjusted EBITDA of RUB13,019mn or a 14% y/y improvement, and 3% above the consensus. At the same time,
129 RUSSIA Country Report November 2019 www.intellinews.o