OREANDA-NEWS. September 2, 2010. The State Property Fund of Ukraine (SPF) has offered Transmashholding to accept the cancellation of the agreement on the purchase of the 76% stake in Luhanskteplovoz, the SPF chairman Oleksandr Riabchenko announced on Sep 1. According to the terms of the privatization sale contract, the Russian company should have transferred the funds to SPF before Aug 31, but failed to do so.  As a result, it has automatically lost the right to claim the pledge of UAH 40mn. Moreover, the Company will also have to pay an additional UAH 82mn in fines for missing the payment deadline. Now the Transmashholding has 20 days to respond.

Millennium Capital considers the news as negative for Luhanskteplovoz. The company stands a strong chance of losing the Russian investor, along with a potential opportunity of getting plentiful orders from the Russian railways. There is also no short term gain here, since the current market price of LTPL (UAH 876mn) is well above the price the other competitor (Pryvat) is said to have been ready to pay for the asset (UAH 600mn).