Agreement Break
Sintez sues RWE for $1.4 billion over TGK-2
Russian energy firm Sintez Group said on Monday it was suing German utility RWE for $1.41 billion for breaking their agreement to jointly buy Russian electricity generator TGK-2.
"Sintez Group has filed a claim against RWE in the London Court of International Arbitration in relation to RWE's breach of its obligations in relation to the joint acquisition of OAO TGK-2 shares," Sintez said in a statement.
"The claim amount is $1.41 billion," the statement said.
RWE spokespeople declined to comment.
Sintez spokesman Alexander Levin declined to provide further details of the suit.
In September, RWE said it would not go forward with an earlier agreement to acquire TGK-2 jointly with Sintez, citing uncertain market conditions.
Under the earlier agreement, reached in March, the German energy major and its junior partner, Sintez, were to pay 0.025 roubles per TGK-2 share.
On the Micex stock exchange, TGK-2 shares were trading at 0.0067 roubles each at 0843 GMT, a discount of 73 percent to the selling price agreed upon in March.
RWE shares were up 2.35 percent in Frankfurt at 68.32 euros.
The March agreement would have seen the German energy major and Sintez pay 9.3 billion roubles ($344 million) for the state's 33.5 percent stake in TGK-2. The two companies never said how they would divide the stake.
They also agreed to pay more than 9 billion roubles for the purchase of TGK-2's entire new issue of shares, giving them effective control of the company for a total of around 19 billion roubles, which is $704 million today, or $802 million at the time.
The acquisition of the TGK-2 stake was carried out by Kores Invest, a Sintez unit, on behalf of both investors, but Sintez ended up paying for the entire stake.
It has said RWE never transferred the money for its share in the acquisition.
Businessman Leonid Lebedev is the beneficiary of the controlling stake in TGK-2, which is officially held by Kores Invest on behalf of Sintez Group.
TGK-2, or Territorial Generating Co. No. 2, provides heat and electricity to six regions of European Russia and has an installed generating capacity of 2.6 gigawatts.
It plans capital expenditure of 45.9 billion roubles to build and upgrade power equipment through 2009.
(Published by Reuters - November 10, 2008)