Interview Deputy General Director for corporate management of JSC Inter-regional Distribution Grid Company of the North-West Anatoly Kushnerov

Extraordinary meetings of shareholders of DGC forming a part of IDGC of the North-West, Center and Volga Territory, and Siberia have already taken place. In January the meetings will take place which will settle the matter of joining-up of IDGC of the South, North Caucasus, Center, Urals and Volga.

According to the results of December meetings, three companies were formed as operational ones: IDGC of the North-West, of the Center and of the Volga Territory, Siberia. More than 99 % of shareholders voted “for” on the item of reorganization.

The results of voting of shareholders and passing of the final stage of reforming of the distribution grid complex were commented by Deputy General Director for corporate management of JSC Inter-regional Distribution Grid Company of the North-West Anatoly Kushnerov:

Excellent results. It is a natural result of the great work performed by General Director, top managers of our company, including in the regions. All is good, we move further.

According to the results of the second reorganization, the percentage of those who voted "for" is higher than during the process of the first reorganization when there was a division of "energo" joint stock companies by kinds of activity. At that time 94-96 percent of votes of support were received, and now practically in all companies - 99.9 percent of the total number of those who voted. It is a very good result.

Were such results of voting expected?

Of course, there were some problems as strategic shareholders changed in Komienergo and Pskovenergo. It is connected with disaffiliation of JSC Complex Power Systems with the structure of shareholders. It was necessary to carry on operative negotiations with new minority shareholders - to explain the strategy, purposes and problems of reorganization of the distribution grid complex, and the main thing - what positive effect they will receive in case of joining of DGC to IDGC of the North-West.

We have agreed about cooperation in work and partner relations. Shareholders understood and supported us; the results of voting speak for themselves.

In all "pilot" IDGC, the resolutions on reorganization were accepted. The point of no return has been passed and now we need to start plans implementation.

What tasks will be of the most importance in the near future?

It is necessary to prepare and approve at the meeting of the board of directors of the management company  the resolution on shares issue and prospectus of issue of securities of JSC IDGC of the North-West, and then to register these documents in FFMS. These are the primary goals in the schedule of reforming for January 2008.

The major task is to keep both the quantitative and qualitative structure of the personnel of DGC while translating to the operational company. Almost nothing will change for employees of the joined company - the labour remuneration fund and responsibilities will remain the same. The status of DGC in the zone of the responsibility of the management company will change.

In the beginning of February the term of presentation of the requirements about the redemption of shares comes to an end by shareholders who voted "against" or did not participate in voting concerning the item of reorganization of the Company. We plan that till February 10 the boards of directors of DGC will approve reports on results of presentation of actions for redemption. Then within 30 days the distribution grid companies shall redeem the actions.

Now interaction with the Federal Tariffs Service of the Russian Federation is needed, as well as REC in the constituent entities of the Federation on establishment for 2009 of economically proved tariff for transfer of the electric power for branches of IDGC. Beginning with the next year the regulation bodies including on places, interests of all our branches will be represented by one legal entity.

It is expected that in February a new organizational structure of IDGC of the North-West will be approved as an operational company.

Finally, since April 1, 2008 liquidation of DGC as legal entities and beginning of work of JSC IDGC of the North-West as an operational company will take place; JSC IDGC of the North-West will have seven branches - in the Arkhangelsk, Vologda, Murmansk, Pskov, Novgorod areas, Republic of Komi and Karelia having the amount of the personnel equal to 14 thousand people. 

What is your opinion on the amount of shares to be presented for redemption?

According to the results of voting, no more than 1 % of the amount of voting shares of each Company. Subsequently these share holdings will be realized on the market price.
Recently on the securities market liquidity of shares of our DGC increased, in particular, Komienergo, Kolenergo, Vologdaenergo, and Arkhenergo.
 
When JSC IDGC of the North-West's shares tenders will take place in the Russian share market?

Now we plan that the stock circulation of shares of JSC IDGC of the North-West will begin in the second quarter of 2008 on two basic Russian stock floors: RTS and MICEX Stock Exchange. Bringing of shares to these floors is an important task of the company. We plan to bring JSC IDGC of the North-West to the international stock floors.
At the moment we have entered the last stage of reforming. The operating company is being shaped. Certainly, this will positively influence quality of work of the distributive grid complex of the north-west region. And our main task as an operating company is acceptance of competent managerial decisions, stable work of the whole distribution grid complex promoting increase in capitalization of the company.

One of the basic tools in solving this task is continuous interaction with professional participants of the stock market, potential investors, international financial organizations and credit institutes.

INFORMATION:

The extraordinary general meeting of shareholders of JSC Inter-regional Distribution Company of the North-West /IDGC of the North-West /, the functions of which are executed by the Management Board of RAO UES of Russia, on 25 December 2007 made a resolution on increase in the authorized capital of IDGC by 9,5687 billion rubles by converting shares of 7 DGC and floatation of additional ordinary registered shares in the amount of 95, 687, 000 pieces at par value of 0.1 ruble.