RAO UES Sells its Stake in Power Machines
RAO UES of Russia has agreed to sell a blocking stake in Power Machines to Highstat, whose beneficiary is the head of the steel producer, Severstal, Alexei Mordashov. As reported on November 27, RAO UES closed talks with Highstat over a 25% plus one share in Power Machines, and is ready to accept Highstat's offer of $486 million, which is nearly 25% above the stake's market value. Currently, Highstat controls 30.4%
in Power Machines.
The Board of Directors of RAO "UES of Russia" approved the sale of its Power Machines stake on 30 March 2007. The decision to sell the stake to a Russian private strategic investor selected through competitive negotiation was taken on 31 August 2007.
Over the past two years, since RAO UES acquired the stake in Power Machines, the latter's market capitalisation more than quadrupled. During the period, Power Machines produced its development strategy and investment programme.
The transaction was closed in December. The proceeds from the sale will be used to cover the deficit in funds needed to finance some investment projects, and to create a reserve fund to finance the reorganisation of RAO "UES of Russia".