December 5, 2019. Moscow, Russia. PJSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces intention to divest of its assets in Armenia to PJSC Hrazdan Power Company (HrazTES).

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JSC Hydroinvest, a 100% subsidiary of PJSC RusHydro, entered into a share sale agreement with PJSC Hrazdan Energy Company (HrazTES, Tashir Group), to divest JSC MEK, a company operating Sevan-Hrazdan cascade of hydropower plants in Armenia. RusHydro owns 90% in JSC MEK.

Earlier RusHydro’s Board of Directors approved divestment of the Group’s shareholding in JSC MEK. The Public Services Regulatory Commission of the Republic of Armenia has authorized the transaction as well.

According to the agreement, the selling price of 527,085 ordinary shares is determined at RUB 172.96 mn. Transfer of shares is conditional on HrazTES’s cancellation of RusHydro’s guarantees on liabilities of JSC MEK before the European Bank for Reconstruction and Development and Asian Development Bank. Upon conclusion of the deal, RusHydro’s consolidated debt will be reduced by USD 55 mn.

The funds raised by JSC MEK under guarantee by RusHydro earlier were allocated towards an investment plan aimed at modernization of the cascade’s hydropower facilities. As a result, installed capacity of Yerevan HPP-1 increased by 10% and a new automated control system was put in place, enabling better operations control and reducing water discharge by 4% during electricity power generation as well as improved management of irrigation discharge. The company also carried out a number of activities aimed at increasing safety and uninterrupted operations of the cascade’s plants. Overall, the investments for the period improved the system reliability of the facilities.

JSC MEK is one of the largest power generation companies in Armenia. It operates seven hydropower plants with combined installed capacity of 561.4 MW or 14% of the country’s total installed capacity. The cascade of hydropower plants produce 8-10% of Armenia’s electricity per year. The power generation by the plants of the cascade is dependent on water inflows of the Hrazdan river and water irrigation discharge from Sevan Lake.