OREANDA-NEWS. September 29, 2010. Lietuvos Energija has made yet another important step towards implementation of Lithuanian national energy strategy and the requirements of the European Union Third Energy Package - on September 24 the Management Board of the Company approved draft conditions for spin-off of transmission system infrastructure and other assets related to electricity transmission functions from the company. Upon approval of these conditions, the spun-off assets will be transferred to the LITGRID Turtas AB – a company to be newly established, which will become the owner of 100 per cent shares of LITGRID AB, performing the activity of transmission system operator.  All shareholders of Lietuvos Energija AB will also become shareholders of LITGRID Turtas AB, proportionally to their own part of shares.  It is intended that assets, rights and duties, related to the part of activity, which is being spun-off, will be transferred to LITGRID Turtas AB on December 1, 2010 or not later than by February 1, 2011.

„In the implementation of electricity sector reorganization project, it is aimed to create conditions for legal independence of electricity transmission activity and its spin-off from other activities of the sector.“ The resolution of the Management Board will allow an optimum, without disturbance of company activity processes and taking into account interests of small shareholders, to perform procedures of property spin-off and to create independent functional generation and transmission blocks", - said Mr. Aloyzas Koryzna, Chief Executive Officer of Lietuvos Energija AB.

At the moment VAE controls 97.5 per cent of Lietuvos Energija AB shares, 2.5 per cent of shares are owned by small shareholders. The same structure will remain also in the company LITGRID Turtas AB. The authorized capital of Lietuvos Energija AB accounts for LTL 993 614 306. After the spin-off the authorized capital of Lietuvos Energija will account for LTL 489 282 926, while the authorized capital of LITGRID Turtas AB will reach LTL 504 331 380. It is intended that upon the spin-off and after the performance of requisite formalities, shares of LITGRID Turtas AB will be traded on the market, regulated by NASDAQ OMX Vilnius AB.

The alternative of ownership unbundling, stipulated in Third Energy Package, requires to ensure effective spin-off of electricity transmission activity not only from electricity generation and supply, but also from distribution activities and their commercial interests. The spin-off of LITGRID Turtas AB is performed as defined under Law on Joint-stock Companies of the Republic of Lithuania,  when a part of the company, which continues its activity, is spun-off and on the basis of assets, rights and duties, assigned to this part, a new company is established of the same legal status, i.e. separation is performed by spinning-off a part of Company activity, as a set of assets, rights and duties, which from the perspective of organization comprises an autonomous economic unit, performing activity and able to perform its functions on its own accord.

The spin-off will be performed as defined under the procedure established by legal acts of the Republic of Lithuania, after the general shareholders meeting of the Company adopts a resolution regarding the spin-off of the Company, approval of the spin-off conditions and other related issues. The general shareholders meeting is scheduled to take place at the end of October. The Company will announce the exact date of the general shareholders meeting under procedure established by legal acts.

Subsequent to the spin-off Lietuvos Energija AB will continue operating as the main company of electricity generation block. Based on the spin-off of functions, the generation block of electricity sector companies under formation is one of the four blocks, which are being established while implementing the plan of electricity sector.  The other blocks encompass electricity transmission, distribution and their maintenance activities. 

 The reorganization of the entire electricity sector is aimed to ensure that Lithuanian electricity sector functions more efficiently, the structure under development would ensure Lithuanian energy independence, while the sector‘s activity model meets the EU Third Energy Package requirements, which stipulate spin-off of transmission activity from distribution and generation activity and create activities for integration of Lithuanian electricity system into the EU market and ensures the financing of commenced strategic energy projects. Its is estimated that the reformed structure annually will allow saving of about 10 per cent of expenses, and the more effectively functioning companies will create added value for shareholders and will allow to secure stable prices for consumers.