Alexey Miller, Chairman of the Gazprom Management Committee and Viktor Vekselberg, Chairman of the Renova Group Board of Directors signed an Agreement of Intent today at the Gazprom headquarters.

The document confirms the parties' intent to merge their power assets on the platform of Gazprom energoholding and transform the merged Company into an open joint stock company that could subsequently be listed on a stock exchange.

The target capital structure of the merged Company stipulates that Gazprom will receive up to 75 per cent less one share and Renova – at least 25 per cent plus one share.

Thus, it is projected that the merged Company will manage the key power generation and power distribution assets owned by both parties.

In the process of the Shareholders Agreement elaboration the parties will outline the final list of assets and the amount of stakes in the merged Company, prepare all the necessary legally binding documents and coordinate the deal with the Federal Antimonopoly Service.

Background

Gazprom energoholding (a wholly-owned subsidiary of Gazprom) was formed as a vertically integrated company under the Power Generation Strategy implemented by Gazprom. The company runs its power generation subsidiaries as a unified corporate center within Gazprom Group's power generation sector.

Gazprom energoholding holds controlling stakes in Mosenergo, TGC-1, WGC-2 and WGC-6. The aggregate installed capacity is nearly 37 GW.

Integrated Energy Systems (IES) (member of Renova Group) holds strategic/controlling stakes and runs four power generation companies (TGC-5, TGC-6, TGC-9, VoTGC) with the aggregate installed capacity of some 16 GW.

The power distribution business of IES covers the Urals and Volga regions. Over 10 million individuals and some 62 thousand legal entities are among the customers of the power distribution companies.