The Board of Directors’ meeting has adjourned at the Gazprom Headquarters.

In its resolution from July 12, 2006, the Gazprom Board of Directors approved consolidating the Gazprom and its subsidiaries’ household gas appliances manufacture assets within a single holding company.

Today, the Board of Directors has approved the asset consolidation scheme and agreed on deals contemplating Gazprom’s acquisition of additionally issued shares in Gasmash as well Gasmash’s acquisition of stakes in the Kanevsky Gas Equipment Plant and Armavir Gas Equipment Plant.

Reference:

Gazprom is the largest asset owner in the Russian household gas appliances manufacture sector. In 2005 the Gazprom Group of companies produced more than 60 per cent of gas stoves and 53 per cent of instantaneous water heaters of the Russian total.

The Gazprom Group’s asset structure includes:

• the subsidiary of Gazprom – Gasmash (92.5 per cent);
• the subsidiaries of Gasmash – Vladikavkaz-Gazoapparat (51 per cent), Gazapparat (63 per cent), Volgogazoapparat (53 per cent), Chaikovsky and Balakirevo branches;
• Gazprom, Gasmash and its subsidiaries’ joint manufacture of gas equipment in the town of Chaikovsky (Perm Oblast), settlement of Balakirevo (Vladimir Oblast), cities of Saint-Petersburg and Vladikavkaz;
• the subsidiaries of Kubangazprom – Kanevsky Gas Equipment Plant (100 per cent) and Armavir Gas Equipment Plant (99.93 per cent);
• a branch of Spetsgazavtotrans – the gas stove manufacture plant in the town of Votkinsk, Udmurt Republic.

Amalgamating the assets will help enhance capitalization of Gasmash, raise investment attractiveness of the integrated holding company and entice a strategic investor for asset acquisitions. Furthermore, the returns on sales of the Gasmash holding company’s amalgamated assets will be bigger versus the sale of each asset within a separate deal and non-core assets of Gazprom will be divested with minimum risks and tax consequences.