Atomenergomash and major shareholders of Energomash (UK) Limited (Alexander Stepanov and Alexey Pleshcheev) signed a memorandum of understanding giving Atomenergomash possession of 50% plus two shares of Energomash (UK) Limited.

Energomash (UK) Limited is a holding of Energomash Group that controls such factories as Atommash (Volgodonsk), Belenergomash (Belgorod), Chekhovenergomash (Chekhov, Moscow Region), Barnaul Boiler Factory and Uralelektrotyazhmash-Uralgidromash (Ekaterinburg), and engineering   and installation companies as well. Energomash (UK) Limited also owns 58% of GT TETs Energo, the company handling the investment project of small gas-turbine generators construction. Energomash Group is one of the leaders in Russian power engineering, producing a wide range of equipment for various types of energy. The Company’s target markets are equipment for nuclear, thermal, and hydro power plants, oil and gas and mining industry, metallurgy, railway, construction, and other industries. Energomash exports nearly 20% of output to CIS countries, Asia, and Europe.
 

Energomash manufacturing facilities and engineering centers are located in eight regions of Russia with 12 400 people employed in total. Energomash incorporation into Rosatom State Corporation will enable the Group to utilize the manufacturing capacity to a higher extent and avoid downsizing at the enterprises.
 

The parties have agreed to finalize the price of the shares and sign the acquisition agreements within one month commencing the signing of memorandum. During the same time period Atomenergomash is to complete the due diligence of Energomash group. The cash gained through the deal will be used to pay remaining debts of Energomash enterprises to commercial banks and the debt remainder will be restructured on terms and conditions to be agreed upon with creditor-banks.
 

Energomash’ controlling interest is being acquired in compliance with Atomenergoprom policy pursued to give rise to competition among monopoly suppliers of  long lead nuclear power equipment. Specifically, upgrade and extension of Vologodonsk-based Atommash will result in evolving another reactor equipment vendor in the Russian market.
 

Kirill Komarov, Atomenergoprom CEO, said, “Our goal is to make available at least two or, preferably, three possible vendors for any type of equipment. Last year’s results showed that we get fair price in the competitive environment only.” As he pointed out, to efficiently implement Russia’s nuclear power plant construction program, in 2007 Atomenergoprom identified about 20 types of critical equipment; 85% being supplied by monopolies. “We have been constantly pursuing a pro-active approach in searching, attracting, and setting up alternative equipment vendors. As a result, the monopolies currently cover only 26% of critical equipment segment. It is expected to become absolutely competitive in 2011, and alternative vendors will be available for the whole range of critical equipment,” Mr. Komarov said.

The deal will also ensure that Atomenergoprom has extra facilities and capability to implement the program of nuclear power plant construction and equipment export. The Group’s factories are monopolies in manufacturing such types of atomic industry equipment as special-purpose valves and pumps, high pressure pipelines, fuel handling machines, and transfer and process equipment. After Atomenergomash affiliation with Energomash (UK) Limited, the parties anticipate to expand cooperation in atomic equipment manufacture and increase the amount of Rosatom purchase orders placed with Energomash factories.
 

According to the memorandum, Alexander Stepanov, current Energomash (UK) Limited Director General, will retain operational control over the company, while Atomenergomash representatives will be introduced to the Board of Directors of the holding and Energomash affiliates to perform strategic management and control as established by the corporate procedure. The parties agreed to ink the shareholders agreement within one month commencing the signing of memorandum and finalize corporate management issues.

For reference:

Energomash Group is one of the leaders in Russia’s power engineering industry. Energomash legal entity includes a holding company registered in Great Britain, Energomash (UK) Limited, and a number of Russian manufacturing companies. The Group’s engineering companies manufacture, sell and service boilers, gas turbines, transformers, hydro generators, pipelines, premium quality valves and steel structures. GT TETs Energo power generation company sells power to wholesale and regional markets.

Energomash includes:
–  22 manufacturing facilities;
–  9 production companies;
–  8 engineering centers to develop and design new equipment;
–  3 construction and installation companies;
–  1 O&M company.
  
Atomenergomash (Atomic Power Engineering) was established as part of Rosatom State Corporation in March 2006. The company is controlled by Atomenergoprom that consolidates nuclear industry civil assets. Atomenergomash operates in the field of equipment development and packaged deliveries for nuclear power, oil and gas, and chemical industry. Currently the company is one of the leading supplier to many Russian and overseas customers.
Atomenergomash consolidates nuclear industry engineering assets and owns about 30 assets. Atomenergomash Director General is Vladimir Kashchenko.

Atomenergoprom PR Department