OREANDA-NEWS. On May 22, 2008 RAO "UES of Russia" held an auction to sell off its blocking stake (25% plus one share) in OAO "Russian Communal Systems", reported the press-centre of RAO "UES of Russia".

The public auction was arranged by CIT Finance Investment Bank (OAO) and OAO "Urals Energy Management Company". Bids for the auction were accepted from 21 April through 21 May 2008.

The reserve price was equal to the fair market value of RUB3.1 billion determined based on the report prepared by a consortium of independent appraisers, with a price increment of RUB100 million.

There were two bidders for the RCS stake.

The auction winner, INDVILLE. MANAGEMENT. LIMITED, purchased the shares at the reserve price of RUB3,1 billion (USD131 million), or RUB310 per ordinary share.

After the auction, RAO "UES of Russia" and the auction winner signed the Auction Minutes and the Share Purchase Agreement in respect of the RCS shares.

The proceeds from the sale are threefold greater than the amount spent by RAO "UES of Russia" on the RCS project. RAO UES spent a total of RUB1 billion on building up a blocking stake in RCS and investments in the company's development by purchasing the additional shares.

The proceeds from the sale of the shares in RCS will be used to repay the debts raised by RAO UES to finance its investment projects in the electricity sector and RAO UES reorganization.

The RCS project was launched in 2003. Over the five years of the company's operation, its market capitalization increased by RUB11 billion. Today, RCS operates in 12 regions of Russia and almost 200 municipalities – in the Altay Kray, Amurskaya Region, Bryansk Region, Vladimir Region, Kirov Region, Nizhny Novgorod Region, Sverdlovsk Region, Tver Region, Karelia Republic, Republic of Udmurtia, and Perm Kray. In future, the company plans to expand its activities in the regions where it is present. The priority regions for RCS are the Urals and Volga Region, where the IES-Holding, the company's key shareholder is already operating. The company has long-term agreements (with terms from one to forty-nine years) with regional and municipal authorities.

Currently, RCS is implementing its RUB4-billion investment program which is intended to modernize the utilities sector facilities in the regions. The program will be implemented in three years (2006-2008).