Separation of OJSC "Yenisei TGC (TGC-13)" from RAO "UES of Russia". RAO "UES of Russia" final reorganisation.

By July, 1 2008 OJSC "Yenisei TGC (TGC-13)" being the industry principal structure company will be separated from RAO "UES of Russia" holding within the context of the final reorganisation of RAO "UES of Russia". The separation will be preceded with a number of corporative arrangements primarily aimed at provision for interests of OJSC "Yenisei TGC (TGC-13)" and RAO "UES of Russia" shareholders.

The separation of first generating companies OJSC "TGC-5" and OJSC "WGC-5" (Wholesale Generating Company) from RAO "UES of Russia" was successfully completed on of September 3, 2007. These became the first private power generating companies in Russia established in the process of power industry reforming.

The final reorganisation of RAO "UES of Russia" will be carried out through the separation of holding companies with its partial simultaneous association with the relevant industry principal structure companies: FNC (Federal Network Company), WGC, TGC, etc. There are several types of such holdings.

The first one includes companies shares of which will be distributed both to the state and over minority shareholders (OJSC "IMNC Holding", (Interregional Main Network Company) OJSC "RAO ES of the East", OJSC "INTER RAO UES Holding").

Shares of the second group of holdings will be distributed exclusively to the state. This list includes OJSC "The State Holding" and OJSC "State Holding HydroWGC". Respectively, the state part of FNC and MNC (as well as OJSC "HydroWGC" and a number of JSC-HPS (Hydro Power Stations) shares is on the balance of these holdings. Besides, these companies will receive a part of shares of heat-generating WGC and TGC which are so far the state part of RAO "UES of Russia" authorised capital.

OJSC "Intergeneratsiya", OJSC "Sibenergoholding" and OJSC "Centrenergoholding" are established in the context of shareholders' right to establish the special holdings in the course of RAO "UES of Russia" reorganisation whose shares will be distributed only in favour of certain shareholders. Share holdings of heat generating companies, OJSC "FNC UES", OJSC "HydroWGC", and other assets of this shareholder in RAO "UES of Russia" authorised capital will be transferred to the balance of these companies.

Another holding group includes companies whose shares are distributed only in favour of minority shareholders who did not enjoy their right to establish special holdings. This list includes OJSC "Minority Holding FNC UES" and OJSC "Minority Holding HydroWGC", as well as minority holdings of principal heat WGC and TGC. The part of FNC and main network companies shares, part of OJSC "HydroWGC" and a number of JSC-HPS shares and part of heat general companies' shares (which are shares of minority shareholders), are on the balance of these companies.

The most of the mentioned holdings will be simultaneously joined to the appropriate principal structure companies.

OJSC "IMNC Holding", OJSC "RAO Energetic Systems of the East", OJSC "Intergeneratsiya", OJSC "Centrenergoholding" and OJSC "Sibenergoholding" will be an exception and will remain holdings in the future.

OJSC "State Holding", OJSC "Minority Holding FNC UES" and (according to the RAO "UES of Russia" Board of Directors decision) 56 regional main network (MNC) and 6 interregional main network companies (IMNC) will join OJSC "FNC UES".

OJSC "State Holding HydroWGC", OJSC "Minority Holding HydroWGC" and JSC-HPS associated companies will join OJSC "HydroWGC".

OJSC RAO "UES of Russia" which will have a part of assets that do not concern technological activities of special purpose companies on its balance, after the holding companies separation is complete, will also be joined to OJSC "FNC".

Within the reorganisation process the separated OJSC "Inter RAO UES Holding" will have the blocks of shares of OJSC "Ivanovo CCP", OJSC "North-West CHP", OJSC "Kaliningrad CHP-2", OJSC "Sochi TES", CJSC "Inter RAO UES", assets and liabilities of RAO "UES of Russia" that concern the activity of these companies to its balance.

OJSC "SO-CSC UES" (System Operator-Central Supervisory Control of United Energetic Systems), in the authorised capital of which the share of RAO “UES of RUSSIA” amounts to 100%, will not be separated in the course of reorganisation. OJSC "SO-CSC UES" shares will be distributed between OJSC "State Holding", special holdings and minority holdings of heat WGC/TGC in proportion to the share of the Russian Federation and that of special shareholders and minority shareholders in the RAO "UES of Russia" authorised capital respectively. The distribution of minority part in OJSC "SO-CSC UES" shares between the heat WGC/TGC minority holdings will be carried out by equal parts.

As a result of the reorganisation the state is planned to possess:
• more than 75% of Federal Network Company shares
• more than 75% of System Operator shares
• more than 50% of OJSC "HydroWGC" shares
• more than 50% of OJSC "Inter RAO UES" shares
• more than 52% of OJSC "IMNC Holding" and OJSC "RAO Generating Systems of the East" shares.

Minority shareholders will, in their turn, possess:
• up to 100% of heat generating companies shares;
• less than 25% in OJSC "FNC UES";
• less than 50% in OJSC "HydroWGC" and "Inter RAO UES";
• around 48% in OJSC "Holding IRNC" and OJSC "Energetic Systems of the East" shares.

The schedule of the final reorganisation allows:
• to consider interests of all groups of shareholders of RAO "UES of Russia" and Affiliates and Subsidiaries;
• to proportionally distribute special purpose companies' shares belonging to RAO "UES of Russia" among RAO "UES of Russia" shareholders and/or among companies appropriately indicated by them;
• to reduce the state participation in power industry competitive activities;
• to provide some of the state's direct participation in OJSC "FNC UES" and OJSC "HydroWGC" authorised capitals at the level stipulated by the RF legislation (75% + 1 share for OJSC "FNC UES" and control stock for OJSC "HydroWGC");
• to balance the deficiency of funds invested into network economy and hydrogeneration through the sale of state shares of heat generating companies by OJSC "FNC UES" and OJSC "HydroWGC" companies.

By July 1, 2008 - the date of the 2nd reorganisation stage completion, system functions of RAO "UES of Russia" are to be completely transferred to the state, infrastructure and self-regulated organisations.

The final separation of principal structure companies would mark the completion of power industry reforms and creation of new, de-monopolised industry structure.

COMPLETE INFORMATION