OREANDA-NEWS. March 23, 2011. Ukrnafta, the largest oil & gas producer in Ukraine, held its EGM on Mar 22, Interfax-Ukraine reported on Mar 22. The meeting decided to postpone the increase of the company’s share capital by 25% through an additional share issue along with the creation of a vertically integrated company as its base. As announced, the decision had not been approved because the relevant strategy had to be elaborated. In addition to this, the shareholders disclosed an estimation of the Mkt Cap of the company at USD  4.1bn as of Jan-11.

Millennium Capital considers the news as NEGATIVE for UNAF. We suppose the news indicates that the government (51% stake) and Pryvat Group (~45%) have not reached a definite consensus as to further development of the company yet. Therefore, as we earlier mentioned the placement of Ukrnafta issue on the LSE by end-2011 is highly doubtful. The company’s estimation of Mkt Cap implies the share price to be ~ UAH 598 which is 29% below the closing price as of Mar 22. Besides, the EGM also decided to reorganize the company from an open joint stock to a public company which bears a short term risk of trading suspension due to the procedure of dematerialization which should take place by May-11, as this deadline has been specified by the government regulation.