OREANDA-NEWS. October 8, 2007. IES-Holding LLC filed its Mandatory Offer to purchase ordinary registered shares of OJSC Territorial Generating Company No 9 (TGC-9) to the Federal Service for Financial Markets (FSFM). This filing is due to IES's share in the TGC-9 authorised capital having exceeded 30%. IES-Holding had purchased its shares in the generating company on exchange and over-the-counter markets.

The FSFM will consider the submitted Mandatory Offer within 15 days. Upon exceeding 30% in the authorised capital of OJSC TGC-9, IES-Holding LLC has 35 days to file the Mandatory Offer to the joint-stock company.

The share buyout price set forth in the Mandatory Offer is established in compliance with the requirements of federal legislation proceeding from the average weighted price of TGC-9 shares determined as a result of trading on the RTS (Russian Trading System) and MICEX (Moscow Interbank Currency Exchange) stock exchanges during six months preceding the filing of the Mandatory Offer to the FSFM. It amounts to 0.007244 roubles per share.

The buyout price per 1 kW of installed capacity amounted to 509 United States dollars. Simultaneously, considering the company's net debt which currently amounts to some 315 US dollars, the buyout price totals 601 dollars per 1 kW.

The price offered by IES-Holding is 12% higher than the average weighted price over the past month (0.0064889 roubles per share).

The TGC-9 share buyout price offered by IES-Holding is 32% higher than the average price per 1 kW of installed capacity for all other TGCs at the moment.

The price of IES-Holding's Mandatory Offer is economically efficient as compared with other wholesale and territorial generating companies, with account for the following TGC-9 features:
TGC-9 power generating equipment efficiency:

The average specific fuel consumption at TGC-9 power plants amounts to 376 g/kWh. At the same time, according to the generating companies' reports, the specific fuel consumption is 320 g/kWh for TGC-1 (with account for the ratio of hydroelectric power in its output - 46%), 345 g/kWh for WGC-2, 323 g/kWh for WGC-4, 340 g/kWh for WGC-5, 291 g/kWh for TGC-3, and 298 g/kWh for TGC-5. Thus, the specific fuel consumption for TGC-9 is among the highest as compared with other generating companies, which describes the efficiency of its current equipment as low.
Average age of tgc-9 power plants:

The average age of TGC-9 power plants exceeds 40.5 years, which is 30% higher than the same figure for the industry in general. According to RAO UES of Russia, 39% of TGC-9 facilities are to be decommissioned or reorganised by 2012, which is the highest figure among all TGCs.

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Industrial and environmental risks:

Industrial and environmental risks on the premises of Uralkaliy and the collapse of soil in the town of Berezniki, Perm Territory, may in the next two years lead to the decommissioning of TGC-9 facilities with a capacity of 180 MW for electric power and 1,900 Gcal/h for heat. TGC-9 spending on eliminating the implications of this situation will amount to some 760 million roubles in 2007 alone. With account for continuing soil collapses in the town of Berezniki, assessing future investment appears impossible.

IES-Holding believes that the offered price of 0.007244 per share represents the fair market value of TGC-9 at the moment. IES-Holding intends to discharge all its Mandatory Offer-related obligations to minority shareholders. This Mandatory Offer of TGC-9's strategic investor lowers minority shareholders' risks in the context of the high volatility of the stock market.