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. Last Updated: 07/27/2016

Mosenergo Expects to Meet Demand With Planned Float

The head of Mosenergo, Russia's largest energy utility, said his company plans to issue additional shares to meet the increasing demand of our consumers and to target major new customers.

Chief executive Nestor Serebryannikov said the company was close to finalizing a $50 million loan with the European Bank of Reconstruction and Development which, he said, will go toward upgrading its power stations.

He said the EBRD loan was a sign of "the creditors' confidence in our company and in its potential."

Close on the heels of the EBRD deal, Mosenergo also was awaiting an agreement with Citibank for a $10 million loan, a Mosenergo source said.

Mosenergo's board of directors will seek shareholders approval May 25 to issue 3.48 billion shares. Currently the company has issued 2.56 billion shares, according to Reuters, although it has authority to issue up to 25.6 billion shares.

The capital will be used to acquire the Kashirskaya and Shaturskaya power plants from Unified Energy Systems, and three large and 18 small substations from the city government.

The size of the share issue will be determined after an international firm pinpoints the value of the assets Mosenergo intends to buy, Serebryannikov said.

He said Mosenergo's shareholder structure was unlikely to be affected by the rights issue, although it would dilute the foreign investors' portion from the current 29 percent to 25.5 percent.

The Moscow city government, which currently has no holding in Mosenergo, will emerge with a 5.4 percent stake. UES is likely to increase its stake from 49 percent to 49.7 percent after the shares-for-assets deal.