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Unified Energy System

October 31, 2006

WGC-5 Board of Directors priced additional shares offering

Moscow, 31 October 2006. Today Board of Directors of OAO "Fifth Generation Company of Wholesale Electricity Market" (WGC-5)* priced its additional shares offering at 9 US cents per share**. The decision on the offering price was taken with the aim to maximize the capitalization of WGC-5 providing maximum share liquidity.

WGC-5 offered up to 5.1 billion additional shares, or 14.4% of increased charter capital. Investors’ demand for shares significantly exceeded the offer. The bidders were Russian as well as international institutional and strategic investors.

The fact that demand for shares exceeded the offer indicates the rising investment appeal of interregional generation companies, which were created in the course of structural reform of Russia’ electric power sector against dynamic processes of electricity market liberalization.

Issuance of additional shares in WGC-5 is first experience for Russia’s electric power sector in attracting large-scale private investments into electricity generation. The raised funds will be channeled to construct new generation capacities in electric power deficient regions of Russia according to respective investment projects and to revamp existing WGC-5’s power plants.

Today RAO "UES of Russia" holds a majority stake (87.67%) in WGC-5. RAO "UES of Russia" Board of Directors approved the project of additional shares issuance in WGC-5 on 28 July 2006. After the share placing the stake of RAO "UES of Russia" in WGC-5 will decrease to 75.03%. RAO "UES of Russia" won’t exercise its preemptive rights to buy additional shares to preserve its stake in WGC-5’s charter capital.

According to RAO "UES of Russia" Board of Directors’ decision dated 30 August 2006, WGC-5 along with TGC-5 will be spun off from RAO "UES of Russia" in the course of first stage of the Parent Company’s reorganization already in 2007. Besides the blocking stake in WGC-5 (25%+1 share) will be sold to a strategic investor. Therefore WGC-5 will be one of two first Russia’s private electric power generation companies where RAO "UES of Russia" has no stake and the Government has only a blocking stake.

* WGC-5 comprises Konakovskaya TPP, Nevinnomysskaya TPP, Reftinskaya TPP, and Sredneuralskaya TPP. The installed capacity of WGC-5 power plants is 8,672 MW. WGC-5 shares are admitted to trading on ZAO "MICEX Stock Exchange", OAO "RTS Stock Exchange", and NP "RTS Stock Exchange". WGC-5 has an unsponsored GDR programme for its shares.

** On 23 October 2006 WGC-5 set a price range for its offering of 7.6 to 9.5 US cents per share.

 

 

 

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