Moscow. 25 July 2005. As part of the process to consolidate subsidiaries of OAO "WGC-5", a set of documents has been circulated to shareholders in OAO "Konakovskaya TPP" containing the terms and conditions of the proposal to exchange the power plant's shares for shares in "WGC-5".
Shareholders in OAO "Konakovskaya TPP" interested in becoming shareholders of OAO "WGC-5" and ready to exchange their shares on the terms approved by the management bodies of RAO "UES of Russia" and OAO "WGC-5" are invited to submit, by 26 August 2005, a share exchange request and the set of documents, which must be signed by the shareholder.
The share will be exchanged at a ratio of 19 ordinary shares in OAO "WGC-5" for 1 ordinary share in OAO "Konakovskaya TPP". The ratio calculation is based on the assessment of the market value of shares in OAO "WGC-5" and OAO "Konakovskaya TPP" made by the consortium of independent appraisers, OOO "Pacioli. Audit Company", ZAO "Tsentr Professionalnoy Otsenki" ("Independent Appraisal Center"), and OOO "Ko-Invest".
The fairness of the share exchange ratio from the financial point of view, both with respect to RAO "UES of Russia" and the minority shareholders of OAO "Konakovskaya TPP", has been confirmed by a consortium of investment banks, OAO "Alfa-Bank" and Merrill Lynch International, in the reports submitted to the Board of Directors of RAO "UES of Russia".
It is recommended that the shareholders familiarize themselves with the complete text of the reports submitted by OAO "Alfa-Bank" and Merrill Lynch International, including the allowances, restrictions and reservations in their analysis, on the Company's website, www.rao-ees.ru, which also contains information on the share exchange procedure and electronic forms of all documents required for the transaction.
As the number of Treasury shares owned by OAO "WGC-5" is limited, OAO "WGC-5" will consider share exchange requests received from shareholders of OAO "Konakovskaya TPP" by the above deadline on a first-come-first-served basis.
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The resolution to establish of OAO "WGC-5" as a wholly-owned subsidiary of RAO "UES of Russia" was approved by the Board of Directors of RAO "UES of Russia" on 3 September 2004. The state registration of OAO "WGC-5" was effected on 27 October 2004 by the Inspectorate of the Ministry of Taxes and Levies of Russia in the city of Yekaterinburg, Sverdlovsk Region. Anatoly Bushin was appointed Director General of the Company.
Pursuant to Order of the Government of the Russian Federation No. 1254-r of 1 September 2003, the following companies were included in OAO "WGC-5": OAO "Konakovskaya TPP", OAO "Nevinnomysskaya TPP", the Reftinskaya TPP, and Sredneuralskaya TPP.
By now, the first stage of the process to establish OAO "WGC-5" has been completed by contributing the shares in OAO "Nevinnomysskaya TPP", OAO "Konakovskaya TPP", and the property of the Reftinskaya TPP and Sredneuralskaya TPP owned by RAO "UES of Russia" to the authorized capital of OAO "WGC-5".
As resolved by the Board of Directors, the formation of OAO "WGC-5" is to be completed through consolidation of its subsidiary power plants by exchanging the shares in OAO "WGC-5" for the minority shareholders' shares in OAO "Konakovskaya TPP", which will be followed by a merger of OAO "Konakovskaya TPP" and OAO "Nevinnomysskaya TPP" with and into OAO "WGC-5"..
On 24 June 2005, the Board of Directors of RAO "UES of Russia" approved a number of resolutions which paved the way for direct implementation of the share exchange and merger of the AO-power plants with and into OAO "WGC-5". It is planned to complete the share exchange at OAO "WGC-5" by Q3 2005 and the merger of the subsidiary power plants with and into OAO "WGC-5" by the beginning of Q1 2006.
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