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Unified Energy System

June 6, 2007

RAO UES holds auction to sell its 25.03% stake in OAO "WGC-5"

Moscow. 6 June 2007. Today, RAO "UES of Russia" held an auction to sell its 25.03 percent stake in OAO "WGC-5"*.

The public auction was arranged by the Company's Accredited Agent, OAO "Alfa-Bank", in accordance with the applicable laws of the Russian Federation and the resolution of the Board of Directors of RAO "UES of Russia" of 9 February 2007, ** with OAO "Alfa-Bank" and Merrill Lynch International acting as the seller's financial advisors. Bids were accepted from 27 March to 28 May 2007.

The reserve price was equal to the fair market value of RUB24,658 billion determined based on the report prepared by an independent appraiser. The bid increment was RUB200 million, with the first increment making RUB342 million.

Both Russian and foreign strategic investors expressed their interest in taking part in the auction. Among the auction participants were E.ON Russia Power GmbH, Enel Investment Holding B.V., Rusal Energy Limited, and OAO "NOVATEK".

The shareholding was sold to Enel Investment Holding B.V., which made the best bid of RUB39.2 billion.

The auction price was nearly 60 percent higher than the reserve price.

After the auction, RAO "UES of Russia" and Enel Investment Holding B.V., the auction winner, signed the Auction Protocol and the Share Purchase Agreement in respect of the 25.03 percent shares in OAO "WGC-5". According to the auction terms, the winner will become an owner of the shares after the deal is approved by the Russian Federal Antimonopoly Service and the bidder makes full payment of the shares within 50 calendar days of the execution date of the Share Purchase Agreement.


* OAO "WGC-5" comprises the Konakovskaya TPP, Nevinnomysskaya TPP, Sredneuralskaya TPP, and Reftinskaya TPP. The installed capacity of its power plants is 8,672 MW. WGC-5 shares are included in the B Quotation Lists of the MICEX and RTS stock exchanges. In autumn 2006, WGC-5 raised USD459 million, or RUB12.1 billion, through a public offering of 5.1 billion shares (which makes about 14.1 percent of the company's authorized capital). The proceeds are to be used to finance the company's investment projects.

** On 9 February 2007, the Board of Directors of RAO "UES of Russia" approved the sale of the 25.03% stake in OAO "WGC-5" held by RAO "UES of Russia" as a measure to attract a strategic investor and raise investments in the company and the electricity sector.

Pursuant to the resolution of the Board of Directors of RAO "UES of Russia", the proceeds from the sale of shareholding will be used to finance the investment programmes of OAO "UES FGC" and OAO "HydroWGC", and to create a reserve for the reorganization of RAO "UES of Russia".

The Board will determine the amount of funds to be allocated for these purposes taking into account the results of the sale of 25.03 percent of WGC-5. The Board will decide on the creation of a reorganization reserve for RAO "UES of Russia" after it approves the reorganization budget.

Currently, corporate actions are underway at RAO "UES of Russia" to divest OAO "WGC-5" and OAO "TGC-5", which is part of the first stage of the Parent Company's reorganization. After RAO "UES of Russia" sells its stake in WGC-5 and WGC-5 is separated from RAO "UES of Russia" (which is scheduled to take place in Q3 2007), the state will hold at least 25 percent plus one share in WGC-5.

 

 

 

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