OREANDA-NEWS. March 31, 2010. Ukraine’s State Property Fund announced yesterday it planned to auction off the state’s 76% stake in Luhanskteplovoz (UX: LTPL UK) on June 15, 2010, according to Interfax. The starting price was set at UAH 400 mln, implying UAH 2.4 per share, three times lower than the market. The SPF sold the stake to Bryansk Heavy Machinery, part of Russia's Transmashholding, in March 2007, but that auction was ruled illegal by the Economic Court of Luhansk in September 2009 and shares were returned to the SPF in November.

Concorde Capital: As we continue seeing Transmashholding as the only potential buyer, we think the stake will be sold close to the auction’s starting price. Though we see the potential return of Transmashholding as a shareholder as beneficial for Luhanskteplovoz, we note that this is widely expected by the market and privatization itself is not a news – the SPF put it on its schedule in January. We think the market is overreacting to the news, opening with 14% growth today, and expect a correction soon, as we estimate the stock’s value derived from peer comparison (accounting for the benefits that Transmashholding’s renewed ownership is expected to bring) at 20-50% below the market.