Moscow. December 19, 2007. The extraordinary general meeting of shareholders of JSC INTER RAO UES held in Moscow on December 19th decided to reorganize JSC INTER RAO UES in the form of a takeover by Sochinskaya TES.

Besides, the shareholders approved the agreement for the takeover of INTER RAO UES Holding, JSC INTER RAO UES, Kaliningradskaya TETs-2, Severo-Zapadnaya TETs, and Ivanovskiye PGU by Sochinskaya TES and the deed of transfer of JSC INTER RAO UES, which will be reorganized in the form of a takeover by Sochinskaya TES.

In pursuance of the decision taken by the shareholders at the meeting, the shares of JSC INTER RAO UES will be converted into the shares of Sochinskaya TES according to the following procedure: all shares of JSC INTER RAO UES will be converted into additional common shares of Sochinskaya TES, which will provide the same rights to the shareholders as common shares allocated by Sochinskaya TES.

The reorganization procedure of JSC INTER RAO UES was approved at the RAO UES of Russia Board of Directors meeting held on August 31, 2007.

The reorganization of JSC INTER RAO UES will take place during the final stage of reorganization of RAO UES of Russia. At this stage, there will be a spin-off of INTER RAO UES Holding from RAO UES of Russia with its simultaneous takeover by Sochinskaya TES. According to the separation balance sheet, the shareholdings in JSC INTER RAO UES, Severo-Zapadnaya TETs, Kaliningradskaya TETs-2, Sochinskaya TES, Ivanovskiye PGU, Sangtudinskaya GES-1, and a whole range of other assets will be transferred to INTER RAO UES Holding.   

The spin-off of INTER RAO UES Holding will be accompanied by its takeover by Sochinskaya TES. It is supposed that the companies the shares in which will be transferred to INTER RAO UES Holding during its spin-off from RAO UES of Russia according to the separation balance sheet (namely JSC INTER RAO UES, Severo-Zapadnaya TETs, Kaliningradskaya TETs-2, and Ivanovskiye PGU) will merge with and into Sochinskaya TES.

The shares in Sochinskaya TES will be distributed among all shareholders of RAO UES of Russia and the shareholders of the companies to merge with and into Sochinskaya TES proceeding from the number of shares held by the shareholders in the authorized capital of RAO UES of Russia and the relevant merging companies.

During the reorganization procedure Sochinskaya TES will be renamed OJSC INTER RAO UES.

The reorganization of JSC INTER RAO UES and other companies to merge with and into Sochinskaya TES will involve two stages:

Stage	Event	Schedule
1st stage	Takeover of Severo-Zapadnaya TETs, Kaliningradskaya TETs-2, Ivanovskiye PGU, and JSC INTER RAO UES by Sochinskaya TES.	April 2008
2nd stage	Spin-off of INTER RAO UES Holding from RAO UES of Russia with its simultaneous takeover by Sochinskaya TES (to be renamed OJSC INTER RAO UES).	June 30, 2008

Takeover of INTER RAO UES Holding, JSC INTER RAO UES, Severo-Zapadnaya TETs, Ivanovskiye PGU, and Kaliningradskaya TETs-2 by Sochinskaya TES will help to create an integrated operating company based on Sochinskaya TES assets. The shareholders of RAO UES of Russia and other merging companies will receive direct stakes in this operating company, with the Russian Federation having a controlling stake.  

The separation balance sheet of Sochinskaya TES (to be renamed OJSC INTER RAO UES) will include property of the aforementioned companies and other assets to be transferred according to the separation balance sheet of RAO UES of Russia and the rules of legal succession to the spun-off company, i.e. INTER RAO UES Holding.

By December 19, 2007 the extraordinary general meetings of shareholders of Sochinskaya TES, Severo-Zapadnaya TETs, Ivanovskiye PGU, and Kaliningradskaya TETs-2 have approved the takeover of the companies by Sochinskaya TES.