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Rosseti North-West

August 13, 2007

IDGC of the North-West: reorganization process has started

In the spring of 2008, IDGC of the North-West will become a management company.

On July 17, 2007, the meeting of the Board of Directors of the distribution grid companies belonging to the zone of responsibility of IDGC of the North-West took place. The Board of Directors resolved to regard reorganization of grid companies in the form of joining to IDGC of the North-West as a priority business direction. The schedules of reorganization were adopted.

"Decision on the distribution grid companies’ joining to Interregional Distribution Grid Company was adopted irreversibly; moreover, the schedules were tightened. All reorganization procedures will take a lot of time. Financing is not a simple matter. We will have to change budgets and business plans”, Veniamin Pinkhasik, General Director of IDGC of the North-West, declared during the regional grid companies’ meeting in St. Petersburg.

The companies converted to a single share are operating companies. They have overall control over the enterprises included in their number. 

After joining to IDGC, all “energo” joint stock companies will become branches of the management company. According to V. Pinkhasik, Arkhenergo, Karelenergo, and other customary brands will be kept on the territory.

Another issue is money. How will it be distributed on the territory? Will one power supply system be financed at the expense of the other one, or not? "The funds will not be redistributed. As long as there is no a unified tariff for transfer of the electric power in the North-West, each company will implement its local tariff receipts in the region", General Director of IDGC of the North-West said. Thus, he emphasized that transition to becoming an operational company will allow strict supervision of execution of distributive network companies’ budgets.

Veniamin Pinkhasik: Brands of the power companies are preserved. Money will not be redistributed. Execution of budgets will be strictly controlled. 

The following step is definition of the market cost of distribution grid companies’ shares. On August 15, 2007, the meetings of the Boards of Directors of regional grid companies will take place, which shall approve assessment plan for the purposes of shares repayment at the company’s reorganization.

"The first stage supposes inventory of property, rights and financial obligations of distribution grid companies and IDGC of the North-West, and also definition of the market cost of distribution grid companies’ shares and factors of shares converting. Estimation of cost and calculation of factors will be held by an independent appraiser", explained Anatoly Kushnerov, Deputy General Director for the Corporate Governance of  IDGC of the North-West, Head of the Working Party for Reorganization. Results of the independent appraiser's work will be submitted for approval to the Board of Directors of the Company.

"There is work to do concerning minority shareholders", Veniamin Pinkhasik said. He emphasized that each director of each distribution grid company is personally responsible for execution of the schedule of reorganization and work with minority shareholders. Extraordinary general meetings of shareholders of distribution grid companies are supposed to take place in January 2008.

The purpose of reorganization is creation of a large interregional company operating on the territory of the North-West, potentially possessing greater investment appeal, financial and technological reliability.  

Structural changes in distribution grid companies are inevitabledue toreorganization. Management of IDGC of the North-West guarantees that each company will be individually approached.

 

According to Veniamin Pinkhasik, future change of structure will concern executive bodies of the power companies, but itwill not worsen operating conditions for our workers; reduction and dismissals of production personnel is not planned". New staff list will be composed in the regional grid companies in the near future.

According to the Department for the Capital Management and Shareholder Relations of IDGC of the North-West, capitalization of the uniform operational company will equal about RUR 22 billion (on the basis of net assets cost).

Inferred structure of the share capital of IDGC of the North-West after distribution grid companies’ joining equals 54.35 % (RAO "UES of Russia", 22.10 % (minority shareholders), over 5 % (owners of large shareholdings), 23.55 % (other shareholders). 

Now the zone of responsibility of JSC IDGC of the North-West includes JSC Arkhenergo, JSC Kolenergo, JSC Karelenergo, JSC AEK Komienergo, JSC Novgorodenergo, JSC Pskovenergo, JSC Vologdaenergo, and JSC Yantarenergo.

Regional companies’ joining is held according to the state policy of the power grid assets consolidation.

 

 

 

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