Tuesday, Jul 01, 2008


   (This story was originally published on Monday.) 
   By Elena Murina and Andrew Langley 
   Of DOW JONES NEWSWIRES

MOSCOW (Dow Jones)--Roskommunenergo and Dubai World - the investment arm of the United Arab Emirates government - have agreed to buy wholesale generator OAO OGK-1 (OGKA.RS) in a $5 billion deal, former power monopoly RAO Unified Energy System (EESR.RS) said Monday.

Roskommunenergo - an electricity supplier that operates in 48 regions of Russia - will pay $516 for each kilowatt of OGK-1's installed capacity. It will buy an existing government stake and subscribe to a new share issue, paying a total of 125 billion rubles ($5.33 billion) for a 75% stake in the company.

Dubai World will act as a partner in the deal, providing "a guarantee of payment" totaling $100 million, UES said, unable to elaborate on Dubai World's role in the acquisition. UES also named Israeli billionaire Benny Steinmetz's BSG Group of Companies as another partner in the deal, declining to provide further details.

Should it go through, the deal would mark Dubai World's first major investment in Russia.

No one at Dubai World was immediately available, while BSG Group and Roskommunenergo declined to comment.

OGK-1 is the only generation company that UES hasn't already sold to a strategic investor under a wide-ranging reform aimed at generating investment to revamp aging power plants.

It has six power plants with a total generating capacity of about 9.5 gigawatts.

As UES ceases to exist by Tuesday, its "heirs," state-owned OAO HydroOGK (HYDR.RS) and Federal Grid Co., or FSK, will see the last-minute deal through to fruition.

A spokeswoman for OGK-1 said that the company welcomes the strategic investor, adding that if the deal is finalized within the next few weeks, OGK-1 will be able to smoothly proceed with implementation of its massive investment program.

The offered price of RUB2.60 a share is "reasonable," said Deutsche Bank, arguing that a buyout offer to OGK-1 minority shareholders should be expected no earlier than in 2009, as Roskommunenergo is likely to use a deferral on payment granted by UES for some of its assets - including OGK-1 - earlier this month.

Electricite de France (1024251.FR) and Finland's Fortum (FUM1V.HE) have also expressed an interest in OGK-1, but failed to agree on the price.

More recently, a consortium led by oil and metals magnate Viktor Vekselberg, ended talks with UES after failing to agree on price.

European energy giants Italy's Enel SpA (ENEL.MI), Germany's E.ON AG (EOA.XE) and RWE AG (RWE.XE) and Finland's Fortum are among the investors in Russia's power sector.

Company Web site: http://www.ogk-1.ru

-By Elena Murina and Andrew Langley, Dow Jones Newswires; +7 495 937 84 45; elena.murina@dowjones.com

(Oliver Klaus in Dubai contributed to this report)

(END) Dow Jones Newswires

01-07-08 0431GMT