8 Dec 2010 19:10

RZD plans to sell interest in TGK-14 at tender

MOSCOW. Dec 8 (Interfax) - Russian Railways (RZD) plans to sell its stake in Energopromsbyt, the majority shareholder in TGK-14 , at tender, a source at the company told journalists.

"There must be a competition. There will be no direct sale," the source said, adding that the sale might take place next year.

Another source at RZD told Interfax that the rail operator was ready to sell its stake in Energopromsbyt together with the stake held by the other shareholder, ESN, in a "joint tender." The RZD board of directors will make the final decision. They could review proposals from RZD management before year-end, the source said.

ESN proposed in September that RZD sell its stake in Energopromsbyt (RZD - 51%, ESN - 49%), which owns 83.6% in TGK-14, in an open tender. Previously it was thought ESN would buy out its partner in the joint venture, RZD, which had decided to dispose of the asset. The Federal Antimonopoly Service had cleared the deal.

"RZD valued its stake: given the current situation in the electricity sector and TGK-14's financial situation, the valuation was not very high. In order to avoid speculation that RZD would be selling the stake at a cut-rate price, we proposed conducting an open auction. We sent Vladimir Yakunin and [RZD board chairman, Deputy Prime Minister] Alexander Zhukov a letter containing the proposal," said ESN owner Grigori Berezkin, who sits on the RZD board. In effect, ESN offered to forego its preemptive rights to buy RZD's stake.

The RZD board of directors meeting in September included the issue of discontinuing the company's participation in Energopromsbyt "by selling the stake to the other participant." Berezkin then proposed that the formulation be altered to read: "by holding a tender procedure jointly with the other participant."

TGK-14 supplies electricity and heat to the Zabaikalsk territory and Buryatia. It includes seven power plants with 633 megawatts of capacity.

Inter RAO UES was previously thought to be interested in acquiring TGK-14. Yakunin said that RZD planned to dispose of its TGK-14 interest because it was a non-core business. The form and dates of the sale would depend on the partner, he said in September.