Inter RAO to Spend $5.5Bln Abroad

Itar-TassDod and Sechin preparing to take their seats on the stage of the Inter RAO shareholders meeting on Thursday.
State-controlled electricity trader Inter RAO will spend at least $5.5 billion on acquisitions in Latin America, Asia and Africa in the next two years, the company said Thursday.

"We see the financial crisis as a danger but also as an opportunity," Inter RAO chairman Yevgeny Dod said on the sidelines of the firm's shareholders meeting, which saw a gaggle of state officials elected to the board. "We aren't overloaded with debts and think it is now a unique opportunity to buy abroad."

The power trader is looking to make acquisitions and develop projects in Cuba, Nicaragua, Venezuela, Turkey, Serbia, Indonesia, Thailand and Cambodia. It already operates stations in Georgia, Kazakhstan, Tajikistan, Armenia and Moldova.

The overseas expansion will focus on undeveloped projects and vertically integrated enterprises.

"We plan to spend 65 percent of the money on greenfield projects, while 35 percent will be used for M&A deals," said George Rizhinashvili, Inter RAO's director for strategy and investment. "We prefer companies that use their own raw materials in their production."

While the credit crunch has left many firms scrambling for financing, Inter RAO, 57 percent-owned by the state nuclear corporation Rosatom, remains confident in a steady flow of funds.

"The money will be raised through loans from commercial and investment banks both in Russia and abroad," Rizhinashvili said.

Foreign banks have been hunkering down, however, and many have put a moratorium on discussing new lending programs with Russian firms.

Alexander Nikitin, Inter RAO's chief financial officer, said he had just returned from London, where lenders say there are "no lending programs for Russian companies until the end of the year. … But we hope to get on their shortlists for 2009."

For its long-term financing , the company intends to start issuing its own debt after the global financial situation normalizes by launching a ruble bond program valued at up to 10 billion rubles.

"It will happen either in 2009, or 2010, depending on when the markets come back to normal," Nikitin said. "We need the money to refinance our debts and realize the investment program."

In addition to its foreign objectives, the company is planning to invest 36 billion rubles ($1.3 billion) in modernizing its domestic power stations through 2012, Inter RAO director for investment Sergei Rumyantsev said. The firm operates stations in Kaliningrad, St. Petersburg, Ivanovo and Sochi.

State officials were heavily represented in the newly elected Inter RAO board, with company shareholders voting for Deputy Prime Minister Igor Sechin, Industry and Energy Minister Sergei Shmatko and Federal Property Management Agency chief Yury Petrov.

Also voted in were Nikolai Anoshko, general director of Russische Kommerzial Bank, a VTB Bank subsidiary, and Vyacheslav Kravchenko, the general director of Rosneft-Energo.

The chairman of the board will be elected at the board meeting at the end of November. Sechin is widely viewed as a shoe-in for the position.

"Our new board is composed of very serious people who are ready to support us," Dod, the Inter RAO chairman, told the shareholders.