The Board of Directors of INTER RAO UES has called for an
Extraordinary General Meeting of Shareholders dedicated to
the issues of corporate reorganization. The procedure is to
take place on April 26, 2012 as an absentee vote. The list
of persons authorised to take part in the Meeting and to
demand buying out their shares is made as of 15 March 2012.
In the course of forming the Group's target corporate
structure anticipating 100% possession of the main
generating assets (according to the Board of Directors
decisions), it is planned to accomplish the following
procedures:
1. Both JSC OGK-1 and JSC OGK-3 will undergo a hive-off
procedure, so there will be two joint companies to spin off
- JSC First Generation and JSC Third Generation. All the
assets and liabilities of OGK-1 and OGK-3 will be
transferred to those new companies. At the same time those
new spin off companies will be merged with JSC INTER RAO -
Electric Power Plants (nowadays the company operates four
power plants, such as Kaliningradskaya TPP-2,
Severo-Zapadnaya TPP, Sochinskaya TPP and Ivanovskiye CPP).
2. At the same time OGK-1 and OGK-3 will me merged with
INTER RAO UES.
Thereby all the highest-output Russian power plants
operated by INTER RAO Group will be listed on the balance
sheet of the same corporate entity which is a 100%
subsidiary of INTER RAO UES.
The swap ratio parameters are based upon the reports of the
independent appraiser - LLC Institute of Independent
Appraisal. Morgan Stanley and Troika Dialog provided their
opinions as to whether the swap ratios are fair from a
financial standpoint.
One ordinary share of INTER RAO UES will be the result of
conversion of 0.0416666666666667 of an OGK-1 ordinary share
(24 shares of INTER RAO UES for one share of OGK-1), and
0.025 of an OGK-3 ordinary share (40 shares of INTER RAO
UES for one share of OGK-3).
The reorganization is expected to be completed in the
fourth quarter of 2012. As the result the total installed
capacity of the United Operational Company INTER RAO -
Management of Electric Power Plants will amount nearly 21
GW. Besides that, two second-tier subsidiaries are to be
merged with INTER RAO UES. Those are JSC INTER RAO - Energy
and JSC INTER RAO - Energoaktiv. Those companies own small
minority stake in energy companies which partly belong to
INTER RAO UES directly.
"The goal of the reorganization is to consolidate 100%
of the Group's major power generating assets and create
a common framework of their operational management. It is
necessary to simplify the ownership structure of the
assets, increasing its transparency and streamlining
administrative costs. We expect the reorganization to have
a positive impact on investment prospect for INTER RAO.
Among other reasons, because of the essential free float
increase and elimination of conglomerate discount",
said the Chairman of the Executive Board of INTER RAO UES
Boris Kovalchuk.
Along with optimization of the current structure of INTER
RAO Group the head company of the Group - INTER RAO UES -
is to be reorganized by acquisition of JSC Bashenergoaktiv.
On the assumption of the preliminary concept of
reorganization and in the case of receiving all appropriate
corporate approvals by Bashkirenergo and JSFC Sistema, it
is expected that Bashkirenergo will be reorganized by
disproportionate split into two companies: JSC
Bashenergoaktiv (simultaneously merged with INTER RAO UES)
and JSC Bashkirian Grid Company. At this point
Bashenergoaktiv will take control over entire power
generation business of Bashkirenergo by obtaining the
shares of LCC Bashkir Generation Company, LCC Bashkirian
Heat Distribution Network, and LCC TPP-5 CPP.
The details of Bashkirenergo reorganization are to be
determined by the company's management (corporate
governance bodies). At the same time the Board of Directors
of INTER RAO UES has taken all the necessary decisions for
Bashenergoaktiv acquisition, including determining the
position for the shareholders vote on the reorganization at
the Bashkirenergo shareholders' meeting.
According to the decisions of INTER RAO UES Board of
Directors one ordinary share of INTER RAO UES can be the
result of conversion of 0.0016588785046729 of an ordinary
share of Bashenergoaktiv (602.82 shares of INTER RAO UES
for one share of Bashenergoaktiv), and 0.00218293620292083
of preferred share of Bashenergoaktiv (458.10 shares of
INTER RAO UES for one preferred of Bashenergoaktiv). These
swap ratios have also been confirmed to be fair from a
financial standpoint.
Morgan Stanley and Troika Dialog have acted as investment
advisors in these transactions.
The Board of Directors of INTER RAO UES has also taken
decision with respect to the bank guarantee agreement with
Gazprombank in case of necessity of such element in the
deal structure.
With the purpose of conversion of the above-referred
companies' shares into INTER RAO UES shares the Board
of Directors is suggesting the General Meeting of
Shareholders to approve the increase of share capital by
additional issue of ordinary shares. On the assumption of
the reorganization details provided the conversion of all
minority stakes of the companies to be merged the share
capital of INTER RAO UES would increase by not more than
10%.
In addition to the decisions concerning the reorganization
the Board of Directors has approved the sale of blocking
stake of JSC ENEL OGK-5.
INTER RAO UES is a diversified energy holding working in
various segments of Russian and international electric
power industry. INTER RAO UES is a leading exporter and
importer of electric energy in Russia actively increasing
electricity generation and sales activities and developing
new lines of business. INTER RAO UES corporate strategy is
focused on making the company a global energy enterprise
and a key player in the international energy market. INTER
RAO UES Group owns and operates approximately 28,000 MW of
installed power generating capacity. www.interrao.ru
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