OREANDA-NEWS. August 02, 2010. Holding MRSK announced a public offering of 864m shares at RUB4.14, worth USD115m and representing 2% of the company’s current share capital. The purpose of the share issue was to transfer RUB4.37bn of the state budget funds for use toward the Sochi Olympics, and 1.06bn of shares were previously bought by the state under preemptive right, reported the press-centre of OTKRITIE Financial Corporation.

Any investor may participate in the SPO via a request to the company by 18 August, specifying the number of shares to be purchased. Requests will be handled on ‘first come-first serve’ basis. Holding MRSK will take 2-9 days to decide on requests. If accepted, investors have 20 days to pay, receiving the shares in 8 another days.

View: Investors wishing to participate in Holding MRSK’s SPO have until at least 9 September to decide whether to transfer the money or not, as there is no penalty for investors who decide against participation after their acceptance of their requests. We believe the scheme effectively represents a zero-cost stock option on Holding MRSK with a strike price of RUB4.14 and an expiration date of 9 September. The current market price is RUB4.18/share, hence the option now is ‘in the money’.

Action: We recommend that investors participate in Holding MRSK’s SPO, as it essentially represents a cost-free stock option opportunity.