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Unified Energy System

March 14, 2008

RAO UES determines results of sale of TGC-2 and TGC-6 shares

Moscow, 14 March 2008. Today, the RAO UES Tender Commission has reviewed the bids for the 33.47% stake in OAO "TGC-2" owned by RAO "UES of Russia", which are attributable to the government stake.

Interest in the TGC-2 shares was expressed from Russian and foreign strategic investors, including International Power (UK), Mitsui (Japan), RWE and Evonik (Germany), Gazprombank, Norilsk Nickel Mining and Metallurgical Company and Prosperity Capital Management. The best bid was received from Kores Invest.

Kores Invest offered RUB9.3 billion ($392.9 million) for the 33.47% stake in TGC-2, or RUB0.025 ($0.001055) per ordinary share. This is 11% higher than the average weighted price of TGC-2 shares in January and February 2008, and corresponds to $568 per kilowatt of the company's installed capacity.

Kores Invest has also expressed an intention to take part in the open subscription for additional shares in TGC-2. Subscriptions for TGC-2 additional shares will be accepted from 28 March 2008 to 9 April 2008.

The proceeds from the sale of the "government stake" in TGC-2 will be used to finance the deficit of the FGC investment programme. The proceeds from the additional share issue will be used by TGC-2 to implement its investment projects: new capacity will be brought on line in all areas were the company operates, primarily in the Vologda, Novgorod, and Yaroslavl energy systems, where energy shortages are especially acute.

After the sale of the "government stake" and the share offering, RAO UES will hold at least 11.38% of TGC-2. These shares will be distributed among the minority shareholders in RAO "UES of Russia" after the Company's reorganization is completed.

***

The RAO UES Tender Commission named the best bidder for the 439,217,262,097 ordinary shares in TGC-6 ("government stake") held by RAO "UES of Russia", which makes 34.06% of the company's authorized capital before the proposed capital increase.*

The highest bid was submitted by the KES-Holding together with New Russian Generation as a minority partner. The price of $0.00106, or RUB0.025, per share offered by this bidder corresponds to $437 of the company's installed capacity.

Today, the TGC-6 Board of Directors will hold its meeting to determine the offering price for the additional share issue of TGC-6.

As a result of sale of the "government stake" shares in TGC-6, RAO UES will receive RUB10.98 billion, or more than $463 million, in funds from private investor. Also, it is expected that TGC-6 will raise about RUB14.25 billion in funds as a result of its additional share issue. Thus, the total proceeds expected from the additional share issue and sale of the "government-stake" shares in TGC-6 will make about RUB25.23 billion, or $1.065 billion.

The funds received by RAO UES from the sale of the "government stake" in TGC-6 will be spent on the FGC investment programme. The proceeds from the additional share issue will be used to finance the TGC-6 investment programme.

Among the key investment projects to be implemented by TGC-6 will be the construction of the Nizhegorodskaya CHPP with the capacity not less than 900 MW, modernization of the Igumnovskaya CHPP in the city of Dzerzhinsk, Nizhny Novgorod Region, modernization of the Ivanovskaya CHPP-2, and a heating capacity expansion project at the Sormovskaya CHPP in Nizhny Novgorod.

After the sale of the "government stake" and the share offering, RAO UES will hold at least 11.13% of TGC-6. These shares will be distributed among the minority shareholders in RAO "UES of Russia" after the Company's reorganization is completed.


* The decision to increase the authorized capital through issuance of 585 billion additional ordinary shares was approved by the EGM of TGC-6 held 14 December 2007. The share issue was registered with the FSFM of Russia on 24 January 2008.

 

 

 

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