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. Last Updated: 07/27/2016

UES Gives Go-Ahead to Sale of Generators

Former electricity monopoly Unified Energy System said Friday that it had approved larger share sales for two of its generating companies, OGK-1 and TGK-10.

The size of OGK-1's issue, planned for February, will increase to as many as 22.5 billion shares from 11 billion shares. This is equal to 50.4 percent of the company before the sale and 33.51 percent afterward, UES said in a statement.

The size of TGK-10's share sale, also planned for February, will grow to 633 million shares from 500 million shares, equaling 136.55 percent of the company before the sale and 57.73 percent after, said UES, whose board met Friday.

In proportion to the larger share sale, the investment programs of the companies will also be increased.

OGK-1's will be worth 47.9 billion rubles ($1.93 billion) not the 24 billion rubles initially planned, UES said after the board meeting.

TGK-10's share sale will seek to raise up to 46.6 billion rubles ($1.88 billion) in its sale, the new value of its investment program, which was previously worth 31.8 billion rubles.

The extra cash in OGK-1's budget will go toward building another gas-powered turbine with capacity of 325 to 450 megawatts at the Urengoi power station, while TGK-10's extra funds will help build a fifth turbine at its Tyumen-2 power station.

Both TGK-10 and OGK-1, along with 18 other major power producers, are being spun off from UES as it seeks to attract badly needed investment and competition to the power sector, which it previously monopolized on behalf of the state.

The company also said UES would propose in November to the city of Moscow, which holds 5.4 percent in Mosenergo, to tender its stake together with UES's stake, which could allow an investor to consolidate a blocking share of 25 percent.

Mosenergo, the country's largest utility, is controlled by gas export monopoly Gazprom.

UES has repeatedly called on Gazprom to offer a good buyout price to outstanding shareholders. In September, Gazprom offered a buyout price of 6.5 rubles per share, but UES said it might still offer its stake on the open market.

In Friday's board meeting, UES also approved a sale of shares worth up to 8 billion rubles ($323 million) in regional power producer TGK-11.

At the same time as the share sale, which is to take place in the first half of 2008, UES will sell the government's stake of 28.9 percent in TGK-11.

n Italy's biggest utility, Enel, will launch a public offer for the rest of wholesale power generator OGK-5 by the end of this year, Enel's senior executive said.

Enel last week raised its stake in OGK-5 to 37.15 percent as part of a plan to gain control of the nearly 9,000-megawatt generator. Enel plans to invest up to 4 billion euros ($5.7 billion) in Russia as part of its international expansion.

"Next week we will make [the offer] filing. Then Russia's financial market regulator will analyze it for a month. And then we can launch the bid," Enel's head of international development Andrea Brentan told reporters in Palermo.

Under Russian corporate law, an investor with a more than 30 percent stake in a listed company is obliged to make a buyout offer to minority stakeholders.