Company snapshot:
TGK-9 ranks third among Russian peers in terms of instal ed heating capacity and sixth in
Issue info
terms of instal ed electricity-generating capacity. The company’s revenue structure is
balanced between heating revenue (51%), electricity revenue (45%) and other revenue
(4%). TGK-9’s generating facilities are located in the Urals and the company has 3
operating branches, located in Perm, Sverdlovsk and Komi.
Renova may swap energy assets for a stake in Gazprom Energoholding
TGK-6 principal shareholder is IES-Holding – the largest private investor in the Russian
power utilities sector. IES Holding is part of Viktor Vekselberg’s Renova Group. The total
instal ed capacity of IES-control ed generating companies is 16GW, or 7% of total instal ed
generating capacity in Russia. Renova is negotiating with Gazprom power subsidiary Gazprom Energoholding (GEH) regarding a merger of generation assets. The deal
structure provides for IES Holding to merge with GEH, with Renova receiving a blocking stake in the combined company.
The center of consolifation of IES-Holding’s power assets
TGK-9 has also been chosen as a base for the consolidation of al the power assets of IES-Holding. The structure of the deal provides that TGK-9 issues additional shares and
exchanges the newly-issued shares for al the stakes of IES Holing in other power assets. At the moment there is no plans concerning merging al the IES-control ed TGKs into a
united company but stil we believe that this deal wil increase TGK-9’s assets and equity significantly and therefore can be treated as positive for the company’s debt load.
Low fuel efficiency outweigh the positive effect from the cheap coal in the fuel mix
The majority of TGK-9’s generating units are gas-fired but coal also plays a significant role
Utilities yield curve
in fuel mix (15%). The coal TGK-9 uses to fuel its plants is relatively inexpensive, particularly due to low transportation costs. However, these advantages are outweighed by
the fact that the company’s generating assets are outdated and therefore have high fuel
ТGК-2 BО-01
consumption rates. We believe TGK-9’s inefficient generating assets mean the company
Kuzbassenergo Quadra 01 ТGК-6-01 Finance 2
has limited potential to benefit from market liberalization.
Kuzbassenergo
ТGК-5 01 Finance 1
ТGК-9 01 CAPEX 2011-2017 will reach RUB 64.5 bn, Net Debt/EBITDA to peak in
ТGК-1 01 2014 at 4.8x Mosenergo-3 Mosenergo
TGK-9’s mandatory CAPEX program is planned til 2017 when the last power unit under
CSAs is launched. The company is due to spend around RUB 65bn by 2017, and we
believe TGK-9 wil definitely have to raise additional debt to finance its CAPEX. We believe
the company’s aggregate debt wil peak in 2014 with Debt/EBITDA of 4.8x. After 2014,
Duration
additional CSA-based revenues fol owing completion of mandatory investment should al ow the company to decrease its debt load significantly.
13 September 2011 TG K-9: Shareholder structure Key risk metrics VTB Capital Free-float EBITDA / Interest expense Total Assets Total Debt
Source: Company data, IFC Metropol estimates
Net Debt / EBITDA Total Liabilities Total Equity and Liabilities
Source: Company data, IFC Metropol estimates
Revenue breakdown Pre-tax income (EBT) Electricity Net Income CF from operating activity before interest expense and income tax CF from operating activity CF from investing activity CF from financing activity Cash flow for the period MOSCOW OFFICE LONDON OFFICE
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RESEARCH FIXED INCOME RESEARCH Mark Rubinstein Peter Kadish Fedor Kornachev Head of Research Head of FI Research FIXED INCOME AND DERIVATIVES DEPARTMENT Artur Plaude Sergey Kolesnikov Eviza Sokolova Head of department DEBT SYNDICATE FIXED INCOME TRADING Semen Odintsov Sergey Arzumanov Daniil Ivanov Head of Debt Syndicate FIXED INCOME SALES Alexey Krivolap Alexander Tanas Mikhail Dvorkin Dmitry Dolganovsky Head of FI sales EDITORIAL&PRODUCTION Victoria Shishkina Alla Chubakovskaya ANALYST CERTIFICATION
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19 September 2011
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