September 8, 2008 / 9:50 AM / 12 years ago

Norilsk may spin off just one power generator

MOSCOW, Sept 8 (Reuters) - The management committee of Russian miner Norilsk Nickel (GMKN.MM) has decided to recommend its board spin off just one power generator, OGK-3 OGKC.MM, and sell its remaining electricity assets, Norilsk said on Monday.

The board is expected to discuss the issue at a meeting on Wednesday, a Norilsk statement said.

Norilsk has spent billions of dollars on power assets in recent years, banking on the further liberalisation of the electricity market, with the biggest purchase being a $4.6 billion acquisition of OGK-3.

OGK-3 owns six power stations across the country with a combined generating capacity of 8.5 gigawatts.

But the Norilsk strategy ran into trouble after top owners Vladimir Potanin and Mikhail Prokhorov failed to find a compromise over how to split their assets in a long corporate divorce.

Prokhorov last year blocked the spin off of all the company’s energy assets into a separate company. But after he had sold his stake in Norilsk of 25 percent plus two shares to the world’s top aluminium producer, United Company RUSAL, the spin-off issue was raised again.

In May, both Potanin and UC RUSAL backed the spin off with the aim of creating more value for Norilsk shareholders.

The management committee has also recommended the board consider separately the fate of a regional power generator, TGK-14 (TGKN.MM), which provides energy to Norilsk copper projects located close to Lake Baikal.

In 2007 Norilsk owned $7 billion worth of energy assets including 65.15 percent of OGK-3, 27.69 percent of TGK-14, 7.37 percent of TGK-1 (TGKA.MM) and under 2 percent of OGK-5 OGKE.MM and TGK-5 TGKE.MM.

It also owned 3.52 percent of national power giant UES, which was converted into shares of companies formed following its break-up.

It has since sold a stake in OGK-5 for $106 million.

According to Uralsib investment bank, Norilsk currently owns 79.1 percent of OGK-3, 1.8 percent of OGK-5, 1.7 percent in TGK-5, 27.8 percent of TGK-14, 7.4 percent of TGK-1, 24.8 percent of Kolenergo, 24.8 percent of Kola Sales company, 8.2 percent of the Federal Sales Company and 25.5 percent of TyvaEnergo. (Reporting by Polina Dewitt, writing by Aleksandras Budrys; editing by Simon Jessop)

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