OREANDA-NEWS. The Board of Directors approved the purchase by RAO "UES of Russia" of RUB750 million of new ordinary shares in OAO "Russian Communal Systems" (RCS).

The decision to increase the authorized capital of OAO "RCS" by RUB3 billion through issuance of additional shares was taken by the EGM of OAO "RCS" held on 20 August 2006.

The new shares are expected to be issued by private placement ("closed subscription") to the existing shareholders of RCS—OOO "KES-Holding" and RAO "UES of Russia"—in return for cash consideration. As a result of the private placement, the capital of OAO "RCS" will increase to RUB4 billion.

The cash proceeds from the placement will be used to finance the development of RCS Group, and strengthen its financial position.

After the new share issue, the interest of RAO "UES of Russia" in RCS will increase to a blocking stake (25% plus one share), which will make it possible for RAO "UES of Russia" to strengthen its corporate control over the company's activities.