. Last Updated: 07/27/2016

MDM to Merge Energy Assets Into One Holding

VedomostiMDM co-owner Andrei Melnichenko
The owners of MDM banking and industrial empire, Andrei Melnichenko and Sergei Popov, have announced the launch of a vertically integrated holding that will merge its energy assets in Siberia and the Far East.

The move comes as the final step in the dissolution of MDM Group, the owners said Monday.

The new holding is to be built up on the basis of coal producing assets of the Siberian Coal and Energy Co., or SUEK, which is also owned by Melnichenko and Popov, and MDM's stakes in Unified Energy Systems and various regional power companies.

Once the planned breakup of UES goes through, the stakes controlled by MDM will be converted into actual assets and merged into SUEK.

MDM confirmed it has accumulated about a 6 percent share in the national power grid UES, as well as stakes of unspecified size in Altaienergo, Buryatenergo, Krasnoyarskenergo, Kuzbassenergo, Chitaenergo, Amurenergo, Dalenergo and Yakutenergo.

Although MDM Group has yet to disclose the exact size of the stakes, they range from 10 percent to 40 percent, a company spokesman said Monday.

In the meantime the stakes will be collected in the holding using the same SUEK brand name.

The task of building the new holding was assigned to Vladimir Rashevsky, who until last week was chairman of the board of MDM Bank, MDM said in a statement.

MDM Bank, part of MDM Financial Group, is a separate entity and related to SUEK only through its owners, Melnichenko and Popov, Russia's youngest billionaires at age 32.

The decision to spin off MDM's interests in electricity production and merge them with SUEK is yet another step in dissolving MDM Group as a legal entity.

The group has already stopped managing SUEK and chemical company Yevrokhim.

Since then the group's only activity appears to have been the management of its stakes in UES and the energos.

Rashevsky will be replaced at MDM Bank by one of his deputies, Andrei Savelyev, MDM said. Savelyev's tasks are likely to be focused on preparing MDM Bank for an initial public offering to be conducted some time in 2005, Rashevsky told reporters Monday.

MDM Financial Group may issue $300 million worth of five-year eurobonds later this year, he said.