If Fortum reaches a 100% holding in TGC-10, the total value of the transaction will be around E2.7 billion. Fortum said that it will retain its financial flexibility and will continue its Nordic investment program as planned.
Fortum participated in a share auction to acquire a controlling stake in TGC-10. Fortum will acquire a 29% stake of the company from Russian power group UES for E0.8 billion.
In addition, the Finnish firm has committed to acquiring a further 34-47% stake, depending on how minority shareholders use their pre-emption rights, in TGG-10 through a share issue between E0.9 billion to E1.3 billion. This capital increase of E1.3 billion will reportedly remain in TGC-10 and will be used to finance its committed capacity investment program planned at E2.2 billion.
In the first phase of the transaction, Fortum will receive 63-76% of the company’s shares and voting rights. The closing of the first phase is expected in March 2008. Fortum will also make a mandatory offer to purchase the remaining 24-37% of the shares held by minority shareholders.
Mikael Lilius, Fortum’s president and CEO, said: The acquisition of TGC-10 is a significant step in delivering on our strategy. This is a great opportunity to become a significant player in the world’s fourth largest energy market. We will maintain our financial flexibility that allows us to continue our Nordic capacity investment program and finance potential future investments. We are very pleased to have successfully taken this strategically important step.
