Emissions

Tax claims against RAO UES not to affect market

20 May 2005 – Russian power company RAO UES is reportedly facing a tax claim amounting to 3.7bn Roubles ($132m), but analysts do not believe this will affect the company’s current share price.

RAO UES has been contesting these claims since the end of last year, and the company’s management believes the possibility of a positive result is high.

Although some analysts believe that the case will end negatively for the energy holding shares value have not been affected yet.

Guta Bank analysts believe this news is moderately negative for the RAO UES shares market. The share of additional payments may reach approximately 1 per cent of the company’s current capitalization.

Standard & Poor’s Rating Services (S & P) yesterday said the company’s rating would not be affected. “To an extent, the generic tax risk arising from the unpredictability of tax legislation implementation is factored into the ratings on all Russian corporates,” said S & P.

According to S & P, although payment of the disputed claim would significantly affect RAO UES’ liquidity position, it would still be manageable given the parent company’s RUR5.9bn available liquidity reserves at 1 April 2005