Finns Pay $3Bln to Control TGK-10

Finnish utility Fortum said Thursday that it bought a majority stake in power producer TGK-10 for a record price of $767 per kilowatt of capacity and said it would also buy new shares to retain control.

Fortum bought shares that represent 55.29 percent of TGK-10 before the planned sale of new shares in the utility.

Taking into account the net debt of TGK-10, which Fortum will have to take on after buying control, the price of the company is $863 per kilowatt, well above the sector average of around $500 per kilowatt.

The price topped the $753 per kilowatt Germany's E.On paid for power producer OGK-4 and underscored the eagerness of foreign firms to enter the country's liberalized power market, despite competition from local players, who have paid far less.

Finland's largest utility has attempted several times to enter the market, but has been disappointed in the past by slightly higher bids from Russian rivals.

Fortum offered a total of 28.6 billion rubles ($1.18 billion) for the government's 255.6 million ordinary shares, or 111.8 rubles ($4.62) per share, a premium of more than 8 percent to the current market price of 103 rubles per share.

Along with the sale of the government's stake, which was carried out by state-controlled utility Unified Energy System, TGK-10 will also hold a sale of new shares worth 57.73 percent of the company.

Fortum said it would buy up all of these shares for 46.6 billion rubles, meaning that it will spend a total of 75.2 billion rubles ($3.11 billion) on TGK-10.

TGK-10's stock was up over 9 percent in evening trading on the MICEX exchange.

UES is in the process of selling all of its assets as part of a major reform to the power sector, which is being opened up to private investors and to competition.

n UES said Thursday that it had raised 3.4 billion rubles ($140 million) selling its stake in Siberian power company Novosibirskenergo.

Renaissance Capital bought UES's 14 percent share of Novosibirskenergo, UES said in an e-mailed statement. The auction went 200 million rubles higher than the starting price.

Novosibirskenergo runs power plants with 2,522 megawatts of installed capacity, as well as electricity distribution lines in western Siberia.

n TGK-13, a regional power generation unit, said Thursday it plans to sell 30.2 billion new shares.

The offer, equal to 19 percent of the Yenisei region's generator after the sale, gives priority to shareholders of the company as of Sept. 21, TGK-13 said in a statement on its web site.

Reuters, Bloomberg