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. Last Updated: 07/27/2016

OGK-2 Sets Price Range for Offering

Wholesale power generator OGK-2 confirmed Monday that it plans to raise $1.7 billion via a share offering and a convertible bond issue to fund upgrades and improve its competitive position in the quickly reforming sector.

The company set a price range at $14.75 to $18 per Global Depositary Receipt for the offering of up to 12 billion of its new shares, equal to 31.18 percent of the firm's enlarged capital. One GDR consists of 100 shares.

The issue allows OGK-2 to raise $1.77 billion to $2.16 billion and values the firm at $5.68 billion to $6.93 billion, but it said it was seeking to raise only $1.7 billion via both the share offering and the issue of a $300 million to $350 million five-year convertible bond.

It means the firm will have to place a smaller number of shares. The pricing of the offering is expected on or around Sept. 28.

The bond issue has yet to be approved by the company's shareholders' meeting.

It is expected to carry a coupon of 3 percent and a yield to maturity of 4.13 percent to 4.63 percent.

The exchange price is expected to be set at a premium of around 30 to 35 percent above the listing price of the GDRs, the firm said.

OGK-2 is being spun off from former power monopoly Unified Energy System, which wants to sell its generating and distribution assets to raise money for costly upgrades and to introduce competition to the power sector.

Gazprom had been guaranteed to secure control in OGK-2 following a string of assets swaps but its stake will decline to 43 percent following the new share issue.