UES Sets Price for TGK-12

Itar-TassUES's Anatoly Chubais attending an awards ceremony Tuesday near Moscow.
Unified Energy System has set the price of new TGK-12 shares at 75 rubles each, an 8.7 percent premium to market, UES spokeswoman Marita Nagoga said Tuesday.

The Siberian Coal and Energy Co., or SUEK, which owns 44 percent of TGK-12, will buy more shares at this price to maintain at least its current stake, SUEK deputy head Sergei Mironosetsky said.

It will then gain roughly 5 percent more through a share-swap scheme with other UES shareholders, securing control of the regional power producer, Mironosetsky said.

UES has said that in the secondary share offering, TGK-12, or Kuzbassenergo, will sell 100 million of its shares, worth 16.5 percent of its share capital before the sale and 14.16 percent after.

In April or May, UES also plans to sell the government's 133.8 million shares stake in TGK-12 for no less than the price of the secondary offering.

"The price of 75 rubles per share was based on the recommendations of banks advising on the sale, on the bids we got from TGK-12 shareholders with pre-emptive rights to buy more shares, and on consultations with the second-biggest investor," which is SUEK, Nagoga said.

The price implies a value of $420 per kilowatt of TGK-12's generating capacity, she added.

Shares of TGK-12, or Territorial Generating Company No. 12, which serves the Siberian coal mining regions strategic to SUEK, climbed 1.32 percent Tuesday to reach 69 rubles ($2.83) per share.

The company is being sold as part of a sweeping reform of the power sector that will see UES sell off all of its assets by July 1, 2008, with the aim of raising investment and introducing a competitive market for power.

SUEK has signed a deal to pool its coal and electricity assets with Gazprom, potentially forming a company that would control some 40 percent of the country's fossil fuel-based generation.

The planned holding firm is expected to dominate power production in many of Russia's regions after UES ceases to exist, with Gazprom in majority control.

UES officials and regulators have said the deal threatens the most basic goals of the power sector's liberalization, as it would create regional monopolies.