Moscow, 20 September 2005. At the meeting of the Board of Directors of RAO "UES of Russia" scheduled for 30 September 2005, the Board of Directors will consider an additional item of business, the possibility of acquisition by RAO "UES of Russia" of a stake in OAO "Power Machines".
The Parent Company, OAO RAO "UES of Russia", intends to purchase 22,43% interest in OAO "Power Machines" from Interros. As a result, taking into account the shares held by OAO "Lenenergo", RAO "UES of Russia" Holding Company will control a 25 percent plus one share stake in Power Machines. Moreover, as previously agreed, Interros is to transfer its 30% stake in OAO "Power Machines" into the custody of RAO "UES of Russia". RAO "UES of Russia" and Interros will join forces to run OAO "Power Machines" and attract partners specializing in power engineering to take part in the project.
If the deal is approved by the Board of Directors of RAO "UES of Russia", the Company will submit the acquisition of the stake in OAO "Power Machines" for approval by the Federal Antomonopoly Service of Russia. RAO "UES of Russia" intends to fund this transaction by attracting loans.
Today, orders of RAO "UES of Russia" account for 70% of the domestic power equipment market. The purchase by RAO "UES of Russia" of the shares in OAO "Power Machines" is one of the principal elements of the Company's production strategy designed to enhance reliability of energy facilities. RAO "UES of Russia" intends to cooperate with OAO "Power Machines" in improving the latter's technological policy so as to ensure the launch of new products meeting today's requirements of the Technological Policy Framework of RAO "UES of Russia" adopted in April 2005. Meanwhile, RAO "UES of Russia", as the major consumer of equipment made by OAO "Power Machines", is now preparing a portfolio of orders for the period 2005-2010 and is therefore interested in Power Machines' solutions and equipment meeting the international standards. As RAO "UES of Russia" does not rule out the possibility of inviting a strategic foreign investor possessing advanced technologies and solutions in power engineering to acquire a stake in Power Machines.
Power Machines Group is Russia's leading producer and supplier of equipment for hydroelectric, thermal, gas and nuclear power plants, electric power transmission and distribution, and transport and railway equipment. The Group comprises OAO "Leningradsky Metallichesky Zavod" (LMZ), OAO "Electrosila", "Turbine Blades Plant" (ZTL), I. I. Polzunov Scientific and Development Association on Research and Design of Power Equipment (NPO CKTI) based in St.-Petersburg, OAO "Kaluga Turbine Works" (KTZ) in Kaluga, and the sales company, "Energomashexport". The equipment produced by the Group's enterprises is installed in 87 countries throughout the world.
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