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Unified Energy System

December 10, 2007

Preliminary results of TGC-9 IPO and share sale

Moscow, 10 December 2007. Today, the RAO UES Tender Commission has reviewed the bids for the TGC-9* shares owned by RAO "UES of Russia", which are attributable to the government stake, and the Board of Directors of OAO "TGC-9" fixed the price and amount of the additional shares to be issued by TGC-9.

RAO "UES of Russia" intends to accept the bid submitted by OOO "KES-Holding" for the TGC-9 stake held by RAO "UES of Russia". OOO "KES-Holding" offered RUB15.488 billion ($631 million) for the 33.94% stake in TGC-9, or RUB0.00801 per ordinary share. This price was set by the Board of Directors of RAO "UES of Russia" at its meeting held on 30 November 2007.

Based on the decision of the RAO UES tender commission and review of the price bids, the Board of Directors of TGC-9 set the offering price at RUB 0.00801 for each additional ordinary share. Subscriptions for the additional shares in TGC-9 will be accepted from 11 December to 17 December 2007. Based on that price and the amount of funds needed to finance the TGC-9 investment programme, the company will issue 2,126,558,801,498 additional shares (27.18% of its authorized capital after the offering). The proceeds from TGC-9's share offering will amount to RUB17.033 billion, or $694 million.

The overall amount of funds which will be raised through the share offering and sale of the TGC-9 stake will make RUB32.5 billion, or $1.32 billion. The sale price and offering price of TGC-9 shares are approximately 14% higher than the market prices of the company's shares (RUB0.007050 per share, the RTS opening price as of 10 December), which corresponds to $663 per kilowatt of installed capacity.

After the sale of the "government stake and the share offering, RAO UES will hold 12.78% of TGC-9. This stake will be distributed among the RAO UES minority shareholders during the final phase of the Company's reorganization.

TGC-9 will use the proceeds from the share offering to implement investment projects to expand generation capacity. TGC-9 expects to build the Novo-Boroslovskaya CHPP in the Sverdlovsk Region and bring on line new capacity at the Permskaya CHPP-6 and Permskaya CHPP-9, Novo-Sverdlovskaya CHPP, and develop generation capacity in the city of Berezniki, Perm Kray. The proceeds from the sale of the government stake in TGC-9 will be used to finance the investment programme of Federal Grid Company.

***

By now, additional share offerings have been completed by four wholesale generation companies (WGC-2, WGC-3, WGC-4, and WGC-5) and four territorial generation companies (TGC-1, Mosenergo (TGC-3), TGC-5, and SGC TGC-8. The aggregate amount of funds raised by the generation companies through the share offerings is in excess of RUB294 billion, or $12 billion.

Another RUB217 billion, or nearly $8.7 billion, in funds will be raised from the sale of the "government stake" shares in WGC-3, WGC-5, WGC-4, TGC-1 and SGC TGC-8 owned by RAO "UES of Russia". Taking into account the sale of the "government stake" shares in Mosenergo (TGC-3) approved by the Board of Directors of RAO "UES of Russia", as well as the TGC-9 share sale and share offering, the total amount of the private investments in the electricity industry will make almost RUB600 billion, or $24.5 billion.

 

 

 

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