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E.On Sets Record for Russian Electro-Investment
RAO UES of Russia determined the best competitor on Saturday for the purchase of the 60.8-percent state share of United Generating Company 4 (Russian abbreviation OGK-4). The best price, 3.35 rubles per share, was offered by the German electric company E.On. The sale of that package for 100 about billion rubles was the largest investment deal in Russian electricity so far, according to RA head Anatoly Chubais. Analysts are confident that E.On will also buy the entirety of the OGK-4 stock issue as well, in order to retain control over the company.
RAO accepted offers on the state package until Friday evening. On Friday the price of a share in OGK-4 on RTS was 3.04 rubles and on MICEX 3.17 rubles. E.On, therefore, paid 5.6 percent over the highest market price. Chubais described the competition for the company as tough in an interview with The Financial Times and mentioned Rusal and the Finnish Fortum as other competitors.
OGK-4 consists of the Surgut, Berezov, Shatur, Smolensk and Yaivinsky state district power plants. It consists of has a total capacity of 8630 MW.
The board of directors of OGK-4 also set the price for its additional stock issue at 3.35 rubles on Saturday. OGK-4 general director Yury Makushin said that interest was expressed in buying the issue whole. OGK-4 had planned to issue 23 billion new shares (31.9 percent of the increased authorized capital) to attract 46.5 billion rubles for its financial investment program. Based on the high price of the issue, though, the issue can be reduced to 14 billion shares (21.9 percent of the increased authorized capital). E.On will receive between 69 and 69.5 percent of OGK-4, depending on whether minority shareholders decide to take advantage of their preemptive right to purchase new stock. Makushin said that OGK-4 is interested in seeing both packages going to the same strategic investor.
Offers on the new share issue will be accepted for five days, beginning today, then RAO will announce the results of its consideration of them. Its share in OGK-4 after the sale of the state package and additional stock issue will be 22.5 percent. After the reorganization of RAO, those shares will be proportionally redistributed among the holding's minority shareholders. A total of 146.5 billion rubles will change hands in the sale of the two packages. Income from the sale of the state package will go to the financial investment program of the Federal Network Co. and funds from the additional stock issue will go to the OGK-4 investment program.
E.On is the second foreign power company to become a strategic investor on the Russian power market. Chubais told The Financial Times that up to a quarter of the Russian power industry may be controlled by foreigners. In June, the Italian Enel acquired a 25-percent stake in OGK-5 from the state at auction. The price then was equivalent to $669 per 1 KW of capacity. E.On paid $753 per KW. Analysts describe OGK-4 as one of Russia's most efficient power generating companies.
Vladimir Ravinsky
All the Article in Russian as of Sep. 17, 2007
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