Representatives of Gazprom and the Siberian Coal Energy Company (SUEK) shareholders signed the Agreement fixing the major terms for SUEK to merger power and coal assets of both companies. The relevant decisions on the assets deal approval are taken by the Gazprom Board of Directors.

Pursuant to the Agreement, SUEK will issue additional shares to be fully placed in favor of Gazprom subsidiaries, which will own a 50 per cent plus one share stake in SUEK. Gazprom subsidiaries will pay for SUEK additional shares by shares in power utilities.

SUEK’s Board of Directors will comprise 11 members. It will consist of 5 representatives of Gazprom, 4 representatives of SUEK shareholders and 2 independent directors. The Board of Directors will be headed by a Gazprom representative, Vladimir Rashevsky will be the Director General.

The company’s shareholders will enter into an English law based agreement that will regulate their relations including the corporate management principles. Later on, the company is planning to hold an international IPO.

In the near future the parties will turn to the Russian Federation antimonopoly bodies for a permission to execute the transaction, which is planned to be completed before August 31, 2008.

Reference:

As planned, SUEK is to contribute power generation, coalmining and processing assets to the new company. Gazprom subsidiaries – targeted power assets owned by Gazprom in UES of Russia after its reorganization as well 15.61 per cent of the shares in OGK-2, 17.13 per cent in OGK-6, 5.27 per cent in OGK-5, and 5.00 per cent in TGK-5.

The total installed capacity of SUEK’s power generating companies (stations of OGK-2, OGK-6, TGK-12, TGK-13) will average 25 MW (nearly 35 thousand MW considering participation in the Far East power system). The proven and probable coal reserves of SUEK, the largest coal producer in Russia and one of the largest in the world, are estimated at nearly 5.8 bln t.