Results of Board of Directors of PJSC RusHydro
The Board of Directors approved the structure and sequence of transactions aimed at refinancing debt of RAO ES of the East Group, which envisages additional issue of shares and sale of treasury shares to raise funds to refinance loans of PJSC RAO ES East Group.
The placement price of RusHydro’s shares of additional issue is set at RUB 1 per share.
The Board of Directors resolved to increase RusHydro’s share capital through placement of additionally issued shares in the amount of 40,429,000,000 with par value of RUB 1 per share. The shares will be placed through open subscription.
The Board of Directors also approved the decision on additional issue of RusHydro’s shares and the securities Prospectus.
The Board of Directors approved sale of RusHydro’s shares, owned by the companies of RusHydro Group, in the total amount of 15 bn.
The Board of Directors reviewed the information on preliminary terms of non-deliverable forward contract between RusHydro and VTB Bank aimed to refinance RAO ES East Holding’s debt, and commissioned the Management Board of RusHydro to further review and agree on final terms of transactions.
The Board of Directors commissioned Management Board of RusHydro to submit to the Board of Directors within one month terms and conditions of transfer of funds from RusHydro to the companies of RAO ES East Holding.
The transaction provides for a 5-year non-deliverable forward contract between RusHydro and VTB Bank ("VTB" or "the Bank") allowing the Bank to sale the stake upon expiration of contract, including to a strategic investor. The sale price of stake will be deducted from the amount of the Company’s forward liability. In case the sale price is higher than forward price, RusHydro will receive revenue from sale of the stake; in case it’s lower –the company will have to compensate the bank the difference. Dividends paid to VTB Bank will also substantially decrease the Company’s liabilities under the forward contract.
The transactions do not imply usage of the government’s guarantee, and issue of bonds by PJSC RAO ES East, that should have been guaranteed by the government funds. Thus, the transaction will not involve budget funds.
Forward contract doesn’t provide for a put option: RusHydro will not be required to return total sum of financing upon expiration of forward contract, the Company will have to reimburse only the difference between the forward and sale price, in case the sale price is lower than forward price. Thus, the Company is not obliged to buy out its shares from VTB Bank in future.
The issues related to exit of VTB Bank from RusHydro’s equity and search for a strategic investor will be regulated by the shareholder agreement between the Bank and the Russian government represented by the Federal Agency for State Property Management. The sale of stake to other companies, including foreign investors, should be approved by the government.
RusHydro develops the long-term program, which should guarantee that the difference between the sale price of stake and estimated forward price to be reimbursed to the Bank will be minimal or zero. Thus, the Company will seek to mitigate risks related to usage of its own funds upon closing of the forward contract.***
The Board of Directors reviewed the information on implementation of the long-term development Program of RusHydro Group in the 1st half of 2016.
The long-term development Program of RusHydro also includes the amended methodology for calculation and assessment of the integrated innovative KPI that determines the efficiency of the Company’s innovative activities. The weight of the innovative KPI is not less than 20%. The KPI is included in the innovative development program of RusHydro Group for 2016-2020 with an outlook for 2025.
The Board of Directors approved the long-term development Program of RusHydro Group for 2016-2020.
Key amendments to the program include:
- alignment of the long-term development program’s targets with the Group’s development Strategy for 2020 with a view to 2025;
- planned and estimated performance indicators updated in accordance with indicators of consolidated business-plan of RusHydro Group;
- amendment of the program’s events in accordance with updated projects of the investment, operating and innovative programs;
- the long-term development program includes new sections “Staffing system improvement” and “Main areas for restructuring of research and design complex”.