Sintez Sues Firm Over TGK-2 Buy

Energy firm Sintez Group said Monday that it was suing German utility RWE for $1.41 billion for breaking its agreement to jointly buy electricity generator TGK-2.

"Sintez Group has filed a claim against RWE in the London Court of International Arbitration in relation to RWE's breach of its obligations in relation to the joint acquisition of TGK-2 shares," Sintez said in a statement.

RWE spokespeople declined to comment, and Sintez spokesman Alexander Levin declined to provide further details of the suit.

In September, RWE said it would not go forward with an earlier agreement to acquire TGK-2 jointly with Sintez, citing uncertain market conditions.

Under the agreement, reached in March, the German energy major and Sintez were to pay 2.5 kopeks per TGK-2 share.

On the MICEX, TGK-2 shares closed Monday at 0.63 kopeks, a 75 percent discount to the selling price agreed upon in March.

The March agreement would have seen the German energy major and Sintez pay 9.3 billion rubles ($344 million) for the state's 33.5 percent stake in TGK-2. They also agreed to pay more than 9 billion rubles for the purchase of TGK-2's new share issue, giving them effective control of the company for about 19 billion rubles, which is $704 million today.

Sintez has said RWE never transferred the money for its share in the acquisition.