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UPDATE 1-Russia's UES says RWE pays $802 mln for TGK-2
March 14, 2008 / 2:29 PM / 10 years ago

UPDATE 1-Russia's UES says RWE pays $802 mln for TGK-2

(Rewrites with official confirmation, price, details)

MOSCOW, March 14 (Reuters) - Russia’s former power monopoly RAO UES EESR.MM confirmed on Friday that Germany’s RWE (RWEG.DE) has bought effective control of power generator TGK-2 (TGKB.MM) for 19 billion roubles ($802 million).

Alexander Chikunov, one of UES’s top executives, said the price paid was equal to $568 per kilowatt of generating capacity, the terms in which power generators are traditionally valued.

“TGK-2 will receive not less than 9 billion roubles in investments and UES will get close to 10 billion roubles,” said Chikunov, who is the head of Business Unit No. 1 at UES, or Unified Energy System.

RWE’s junior partner in the acquisition is Russian energy and utilities firm Sintez Group. Investment vehicle Kores-Invest filed the bid on behalf of RWE and Sintez Group.

TGK-2 is selling 440.55 billion new shares and at the same time UES will sell the government’s stake in the company.

The price of $568 per kilowatt of capacity is at a premium to the Russian power sector’s average of about $500.

But it is dwarfed by the prices paid by other foreign investors in Russia’s power sector, such as the $753 per kilowatt that Germany’s E.ON EONG.DE paid for OGK-4 OGKD.MM, and the $767 per kilowatt that Finland’s Fortum FUM1V.HE paid for TGK-10 TGKJ.MM.

State-controlled UES, the sector’s Soviet-era monopoly, is selling off all of its assets, including 20 major generating firms known as OGKs and TGKs, as part of a sweeping reform of the power sector.

The sales of TGK-6 TGKF.MM and TGK-7 VTGK.MM are set for later on Friday. (Reporting by Olga Popova; Writing by Simon Shuster; Editing by David Holmes)

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