Moscow, Russia - May 12, 2012 - Sistema JSFC ("Sistema") (LSE: SSA), the largest diversified public financial corporation in Russia and the CIS, today announces that it has signed an agreement with OJSC INTER RAO UES ("INTER RAO UES") regarding the terms of the reorganisation of OJSC Bashkirenergo ("Bashkirenergo"). Sistema Group presently owns 50.53% and INTER RAO UES owns 25.08% of the voting shares of Bashkirenergo.

Following the reorganisation, Bashkirenergo will be split into JSC Bashkirian Power Grid Company, which will combine power grid assets, and OJSC Bashenergoactiv, which will integrate power generation assets. In accordance with the agreement, INTER RAO UES will own more than 75% of the voting shares of Bashenergoactiv, while more than 75% of the voting shares of Bashkirian Power Grid Company will be owned by Sistema. INTER RAO UES will also pay Sistema an amount of up to RUB 14 billion in cash and promissory notes.

The decisions regarding the reorganisation of Bashkirenergo will be submitted for approval at Extraordinary General Meetings of Sistema and Bashkirenergo shareholders, which are scheduled for June 2012. If approved by the EGMs and if various additional conditions can be met (including receipt of necessary government approvals, execution of additional agreements, and other conditions), the deal is expected to be completed by the last quarter of 2012 or first quarter of 2013 after all reorganisation procedures have taken place. 

Mikhail Shamolin, President and Chief Executive Officer of Sistema, commented: "The reorganisation of Bashkirenergo is in line with Sistema's strategy to develop its energy assets. It represents an effective monetisation of Sistema's stake in Bashkirenergo's power generation assets and removes various legislative limitations for the further development of our power grid business."