Actuality February 29, 2008

   Finnish Group Fortum set new price record in the estimation of energy generation – $767 per 1 kW of installed capacity. Fortum was declared the winner of competition for the sale 55,29-percent state stockholding in the generation company TGC-10, and offered for it more than RUR 28,6 bln.

   Finns finally succeeded to get hold over the generation asset in Russia. The company could not claim to control TGC-1 located in the strategic region of the country. The Group remained a few to the victory in tender for OGC-4.

   The transaction for TGC-10 became successful not only for the Finnish investors, but also for the Russian energy holding company. Fortum offered RUR 28,6 bln for 55,29% of TGC-10, that estimates 1 kW of the installed capacity of the company at $ 767. The previous record was set by the German E.ON that acquired OGC-4, on the assumption of estimation at $753 per 1 kW. It is a serious breakthrough of RAO UES of Russia after the series of unsuccessful sales of OGC-2, OGC-6 and wholesale companies also.

   In energy holding company consider the offered price adequate. "Maybe, if the offer was lower, we would not accept it. I do not see the overpayment here", noted Vladimir Avetisyan, the member of the board of RAO yesterday. Yesterday the company securities cost by 18% lower on MICEX than the transaction cost. Taking into account the decline of dollar ratio in relation to ruble and the general situation on world financial markets, the transaction indeed passed at the real cost of asset, experts consider.

   According to Vladimir Avetisyan, the company applied for the whole volume of additional emission. "Depending on the results of prerogative right Fortum will be able to consolidate no less than 75% of TGC-10 after buying additional stocks back", he marked. The total sum of transaction can total more than RUR 75,5 bln.

   Mr. Avetisyan acknowledged that there have not been any tenders for TGC-10. It was reported earlier about the interest to the asset of the French Gaz de France, Lukoil, StS Corporation joint venture of Artem Bikov and E.ON. Then all claimants gave up participation, although some investors called at the information room.

   According to the representative of the energy holding company, Federal Antimonopoly Service allowed the Finnish Group to acquire up to 100% stocks of Generation Company. As the top-manager of RAO UES underlined, Fortum already signed an agreement obligating it to execute investment program of TGC-10.

   In spite of significant transaction sum and not simple period for attraction of borrowings, the Group did not ask for a delay of purchase payment. Facilities will be transferred within two-three weeks. "Fortum is interested in completion of calculations with RAO UES as soon as possible, because it will allow it to start work in the company", Vladimir Avetisyan underlined.

   Fortum confirmed only, that participated in tender. The company declined to comment further up to the official receipt of confirmation from a seller – RAO UES of Russia. It is expected that the board of directors will consider offers for the acquisition of additional emission of TGC-10 stocks.

   Analysts estimate the results of sale as very positive. "$4,62 per stock is a quite high price", says Dmitry Terekhov, from AntantaPioGlobal Investment Group. "We expected that offering would pass on high levels, although our range estimation was rather conservative – $3,8-4,5".

   The expert considers that Generation Company received the core investor that not only possesses competence of Generation Company management, but is already long ago present on the Russian market also. "Victory brought Finns the rather attractive asset that has all chances to double capitalization within three-four years, that none of the other RAO UES generation companies promises", supposes Vasiliy Konuzin from Investment financial corporation Alemar.

   TGC-10 structure includes generation and thermal grid assets of the Tyumen Regional Generation Company, Chelyabinsk Generation Company and stocks of Kurgan Generation Company. The installed capacity of electric energy totals 2785 MW, of thermal energy – 10014 Gcal/hour.