FGC board recommends share issue worth 874.4 bln rubles for merger with Rosseti

MOSCOW. Aug 3 (Interfax) - The board of directors of Federal Grid Company (FGC UES) has recommended that shareholders vote at an extraordinary meeting to approve a supplementary share issue consisting of 1.75 trillion ordinary shares, par value 50 kopecks each or 874.4 billion rubles in total, the company said in a disclosure.

The shares would be issued for the purposes of a merger with power grid holding PJSC Rosseti ; JSC DVEUK-ENES, or Far East Energy Management Company; and JSC Tomsk Transmission Networks and JSC Kuban Transmission Networks .

The shares will be issued by converting ordinary and preferred shares in Rosseti, ordinary shares in DVEUK-ENES and preferred Type A shares in Tomsk Transmission Networks into additional FGC UES ordinary shares.

Rosseti said in a statement of its own that the essential condition for the reorganization of Rosseti in the form of a merger with FGC is the formation of a direct Russian state stake in the charter capital of the merged company of no less than 75% plus one share, which will be achieved, among other things, by cancelling some of the FGC UES shares owned by Rosseti.

The remaining outstanding shares of FGC UES owned by Rosseti will form a treasury stake on the balance sheet of the merged company amounting to about 5% of charter capital, Rosseti said.

The FGC board also approved conversion ratios for the shares: one ordinary share in FGC, par value 50 kopecks each, will be converted into 0.09040/0.60580 ordinary and 0.09040/1.27300 preferred shares in Rosseti.

The conversion ratios were based on the average market price of shares in FGC and Rosseti on the stock exchange for board's decision to convoke the EGM.