OREANDA-NEWS. On October 18, 2007 Board of Directors of "Southern Generation Company TGC-8" has set the price and volume of additional shares offering. At the same time RAO "UES of Russia" Tender Commission has priced the stake owned by RAO "UES of Russia" in TGC-8 and entitled to the State in RAO "UES of Russia" (the so-called State's Stake), reported the press-centre of RAO "UES of Russia".

According to previous resolutions of RAO UES Board of Directors, offering of additional shares and sale of the State's Stake are to be completed simultaneously and at the same price.

The price for offering was set on the basis of competitive bids from investors. They included details on a potential investor into TGC-8 additional shares, price and volume they intend to buy. The deadline for investors to bid was yesterday, 17 October.

TGC-8 Board of Directors and RAO UES Tender Commission received two bids from one investor – Gatecraft Limited acting in the interests of IFD Capital. The first bid had a proposal to buy the whole volume of TGC-8 additional shares except the stake that TGC-8 shareholders will buy exercising their preemptive rights. The second bid had a proposal to buy the State's Stake of 492,756,605,505 shares. Both the bids had one price – RUB0.035 per share.

The price proposed by Gatecraft is a quarter higher than the current market price (RUB0,0289 per share at MICEX as at 17 October) and includes the bonus for the strategic investor's gaining complete control over the company.

TGC-8 Board of Directors has taken a decision to price the offering at the price proposed by the investor – RUB0,035 per share. Board of Directors resolved that, considering the price of offering and emission documents, the number of additional shares to offer will total 685,714,285,715 shares or 33% of increased charter capital.

The final number of shares to place in favor of the investor and results of the placement will be drawn on 31 October 2007 after when TGC-8 shareholders exercise their preemptive rights to buy additional shares.

At the same time RAO UES Tender Commission has taken a decision to accept Gatecraft's proposal to buy the State's Stake in TGC-8.

The proceeds from the placement of additional shares total RUB24 billion, or $963 million. The proceeds from the sale of the State's Stake are estimated at RUB17 billion, or more than $682 million. Hence the total volume of funds raised by TGC-8 from additional shares placement and sale of the State's Stake makes more than RUB41 billion, or $1,7 billion.

After the sale of the State's Stake and additional shares placement, holding of RAO "UES of Russia" in TGC-8 will make 11%. This stake will be distributed among minority shareholders of RAO "UES of Russia" during the final phase of the Company reorganization.

TGC-8 will use the proceeds from additional shares placement to finance investment projects related to development of its electric power generation facilities. By 2011 TGC-8 particularly plans to commission new power units at Astrakhanskaya TPP, Astrakhanskaya CHPP-2, Volzhskaya CHPP, Krasnodarskaya CHPP, as well as a number of small HPPs with total installed capacity of 1,100 MW.

Under the resolution of RAO UES Board of Directors as of 27 July 2007, the proceeds from the sale of the State's Stake in TGC-8 will be allocated to finance HydroWGC investment programme.
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So far four wholesale generation companies (WGC-2, WGC-3, WGC-4, WGC-5) and three territorial generation companies (TGC-1, Mosenergo, TGC-5) have placed additional emissions of shares. The total volume of proceeds from these placements is more than RUB270 billion, or about $11 billion

It's about RUB200 billion, or more than $8 billion that have been raised as the result of the sale of the State's Stake in WGC-3, WGC-4, WGC-5, and TGC-1. The total volume of funds attracted to develop Russia's electric power sector makes RUB470 billion, or more than $19 billion of private investments.