OREANDA-NEWS. May 27, 2010. INTER RAO CEO Boris Kovalchuk announced details about the company’s upcoming assets swap with the state, reported the press-centre of OTKRITIE Financial Corporation:

An updated list of assets was provided.

INTER RAO’s additional shares issue for the purpose of the assets swap will be completed in 1Q11.

Management proposes a maximum additional issue of 13.8 trillion shares, to be approved at the 25 June AGM. The AGM register date is 20 May.

INTER RAO’s new management will present the company’s long-term strategy in the next two months

View: INTER RAO is placing another additional shares issue, which may increase its share capital to 3.9 trillion shares by end of 2010. The next additional share issue may increase this figure to 17.7 trillion, or by 4.5x. The updated list of assets that INTER RAO plans to obtain includes stakes in RAO ES of East, electricity retail companies, and stakes in a number of power engineering companies. INTER RAO will use independent appraisers to determine the pricing of its additional share issue and the value of the assets to be swapped. Other details are unavailable at this time.

Action: We see long-term risks for INTER RAO’s shareholders due to uncertainty on the pricing of the 1Q11 additional share issue. At the same time, there could be speculative support in the stock, because INTER RAO's shares will be used as a currency for the swap. We leave our fundamental-based target price of ў0.15 intact, and maintain a HOLD rating.