Following the VERT offer – criticism and falling Ignitis Group share prices Business

VERT Chairman Renatas Pocius previously told BNS that the proposed methodological changes, which are being submitted for public consultation, aim to ensure long-term investment in the distribution network. However, Ignitis grupė estimates that if the change were approved, the value of ESO’s regulated assets would decrease by 350-400 million. euros.

However, Ignitis grupė does not comment on the impact of the possible decision on the group’s income, stating that the published draft is not a final document, its wording may change or the project may not be approved.

“In view of this and in order to avoid potential misleading investors and to ensure equal information for all shareholders by providing the same information, Ignitis Group will disclose significant information about the group’s activities in a separate announcement through stock exchanges when the applicable regulations are fully clear.” comments 15min said Artūras Ketlerius, Ignitis grupė’s communications manager.

Arno Strumila / 15min photo / “Ignitis group”

After VERT announced the proposed changes to the methodology, Ignitis Group’s share price fell about 12-13 percent last week. Friday at 4:48 p.m. The Group’s shares on the Nasdaq Vilnius Stock Exchange cost EUR 21.25.

M. Dubnikov calls the VERT proposal strange

Financial analyst Marius Dubnikovas, 15min commenting on the proposal, said such revisions are very strange.

“Investors in this case can say that they may have been misled for a long time. These reductions will largely determine the company’s ability to invest in the future and will reduce its income and dividend yield. It seems quite strange to make hundreds of millions like this, so to speak, “said M. Dubnikov.

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According to him, this creates distrust in the functioning of state systems. “Several hundred million euros can be erased with an easy hand and this can be treated as a normal course of action,” said the financial analyst.

Photo by Vidmantas Balkūnas / 15min / Marius Dubnikovas

Photo by Vidmantas Balkūnas / 15min / Marius Dubnikovas

According to M. Dubnikov, such a step reduces the opportunities for energy companies to invest in the future, which is relevant in the presence of particularly high gas and electricity prices. According to him, this is a signal that homework has not been done on time, there has been no shift to renewable resources and no alternatives have been created. He predicted that with the hostage of high gas and electricity prices, “we will be longer and it will be more difficult to change the situation.”

“Such surprises reduce the attractiveness of large state-owned companies, which means that they may have fewer opportunities to issue shares in the financial market in the future. This is not good and more clarification is needed from decision makers, ”said the financial analyst.

Market participants suggest improving the methodology

During the public consultation, market participants and shareholders also called on the regulator to improve the proposed methodology.

The Lithuanian Association of Investment and Pension Funds expressed concern that these changes would affect the investment results of pension funds and their participants.

123RF.com nuotr./Finansai

123RF.com nuotr./Finansai

The European Bank for Reconstruction and Development, which is the second largest shareholder in the Ignitis Group, fears that the proposed changes will significantly increase the group’s cost of capital and that some of the changes are intended to be applied retroactively. According to the bank, this will have a negative impact on investor confidence in the stability and attractiveness of Lithuania’s investment climate.

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The Ministry of Finance indicated that these changes would have a significant negative impact on Ignitis Group’s operations and sustainability.

M.Majauskas: all that remains is to welcome the principled position of VERT

However, the planned methodological changes introduced by VERT have not only been criticized. M.Majauskas15min said investors’ concerns about potentially lower dividends are a matter of secondary importance.

“In my understanding, the goal of state-owned energy companies is to provide quality services at an affordable price,” the politician commented.

Photo by Sigismund Gedvila / 15min / Mykolas Majauskas

Photo by Sigismund Gedvila / 15min / Mykolas Majauskas

He said he understood the need to increase the value of the company, but said it could not be done at the expense of household energy consumers.

“Therefore, all that remains here is to welcome the principled position of VERT to protect the interests of consumers,” said M. Majauskas.

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