By Yekaterina Dranitsyna
Despite recording net losses for the second year in a row, industrial holding Power Machines could raise over $270 million from its additional share issue this August. The company closed its order book on Wednesday.
Power Machines will issue 1.492 billion new shares, increasing its authorized capital stock by 20.67 percent. The decision to distribute the shares through open subscription was made by Power Machines on June 4 this year.
“Most of the new shares will be bought by Unified Energy Systems (UES), Interros and Siemens. If minority shareholders do not exercise their right to buy out the new shares, investors will be offered about 292.4 million shares — 3.36 percent of the enlarged authorized capital stock,” said Sevastian Kozitsyn, analyst at Brokercreditservice brokerage.
At the moment UES owns 25 percent plus one of the company’s 7.217 billion shares, Siemens owns 25 percent plus one share and Interros 30.4 percent.
Current shareholders have a priority right to buy out the shares with a discount of up to 10 percent. The remaining shares will be offered to investors.
The new shares would be priced between $0.16 and $0.185 per share, Business daily Vedomosti cited a source from Power Machines as saying.
“If the shares are acquired at the high end price bracket, Power Machines will attract $276 million instead of the $250 million that was announced earlier,” Kozitsyn said.
According to the Russian Trading System, current capitalization of Power Machines stands at about $1.308 billion. At the end of trade on Wednesday, shares were sold at $0.188 and bought at $0.183.
Brokercreditservice was positive about Power Machines’ prospects despite suffering financial losses.
“We still assess these shares positively. We think the shares could keep growing at 20 percent to 25 percent a year,” Kozitsyn said.
According to its latest report, Power Machines revenue accounted for $579 million in 2006, a 13.2 percent decrease on 2005 figures. Production costs amounted to $583 million. Net loss accounted for $132 million compared to $40.5 million in 2005
“The decrease in revenue resulted from the company’s specific way of accounting and changes in the portfolio of its orders,” the company said in a statement commenting on the report. The share of long-term contracts increased at the expense of short-term contracts and short-term revenue.
The net loss was explained by the completion of contracts in India and Vietnam, which were signed on strict terms in 2003-2004, the company said.
According to the development program approved in March this year, Power Machines will invest a total of $145 million in 2007. By 2010 Power Machines plans to double its volume of production in relation to total power capacity.
Investment over the next five years will amount to $1 billion.
News source: times.spb.ru
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