On December 20, 2007 the Press Office of the Government of the Republic of Lithuania has submitted the information concerning the negotiation results of creation of National Investor

On December 20, 2007 the Press Office of the Government of the Republic of
Lithuania has submitted the information concerning the negotiation results of
creation of National Investor 

The Government approved the establishment of the Lithuanian Electricity
Organization LEO LT, AB 

Today, the Temporary committee (Working Group) formed following the July 11,
2007 decision No 726 of the Lithuanian Government “Regarding the Implementation
of the Law on Nuclear Power Plant of the Republic of Lithuania” presented to
the Government the results of the negotiations with UAB „NDX energija“
concerning the establishment of a National Investor. 
The Head of the Working Group Minister of Economy V.Navickas informed the
Cabinet that positive results had been achieved on principle issues in the
negotiations: the documents of the transaction include the provision stating
that the National Investor would participate in the implementation of the
strategic electric energy projects - the construction of a new nuclear power
plant in Lithuania and connection between the Lithuania's electric power
networks with those of the Polish Republic and Swedish kingdom. 
The negotiation documents record the name of the National Investor company LEO
LT, AB. The letter combination „LEO“ means „Lietuvos elektros organizacija“
(„Lithuanian Electricity Organisation“ in English). 
The portion of the Republic of Lithuania in the National Investor company LEO
LT would account for 61.7% of the shares and votes at the general meeting of
shareholders (the private investor would hold 38.3%). According to the
negotiation results, the State will get a larger major holding of the National
Investor then it was determined by independent international valuators. The
Kruonis hydroelectric pumped storage power station and the Kaunas hydroelectric
power station will be excluded from the composition of the National Investor
and left at the State's disposal. 
The above mentioned share distribution ensures that the State will have
decisive influence in all managing bodies of the company - shareholders'
meeting, Supervisory Board and Board of Directors, as a result it will be able
to fully control the activity of the company and adoption of the decisions. The
Supervisory Board of LEO LT will be comprised of 11 members and the Board of
Directors will consist of 5 members. There won't be made any management
agreements with the private investor UAB „NDX energija“ - LEO LT will be
managed in compliance with the legal acts of the Republic of Lithuania and the
Articles of Association of the company. As an additional protection of the
State‘s interests the shareholders‘ agreement provides for a legal mechanism,
which allows, if needed, for the Government to redeem a certain amount of the
National investor's shares that will be owned by UAB „NDX energija“ (including
but not limiting the State‘s preemption right to acquire the National
Investor‘s shares). 
It should be noted that this agreement is the first case in Lithuania where
after the merger of the state and private capital the State takes over the
control of the company managed by a private entity (AB VST) and gets full power
and control in the established Lithuanian Electricity Organization - LEO LT. 
According to the opinion of international experts from the investment bank
„HSBC Bank plc“, this share distribution and other conditions of the agreements
are balanced and the bank is ready to provide a favourable opinion on this
transaction. 
During the negotiation UAB „NDX energija“ proposed to establish the National
Investor company not on the basis of the public company „Lietuvos energija“,
but by establishing a parent company. After thorough discussions the Government
approved this proposal, since the establishment of the national investor
company on the basis of the public company „Lietuvos energija“ and further
reorganization of this company into a parent company (as is provided for in
Article 10 of the Law on Nuclear Power Plant) is associated with a risk that
the establishment of the National Investor in the form of the parent company
can last for an indefinite time period. However the implementation of this
model is not possible without the amendments to the current provisions of the
Law on Nuclear Power Plant. Therefore the Government has commissioned the ad
hoc Commitee to prepare relevant amendments to the laws. The Draft Law will be
provided to the Lithuanian Parlament (Seimas) together with the Draft
agreements. 
Upon approval by the Seimas of the relevant amendments to the laws, the
negotiations concerning the establishment of the National Investor will be
continued - the Government together with the private investor will establish a
public company LEO LT. The results of the negotiations (agreements and other
documents) regarding the establishment of the Lithuanian Electricity
Organization will be made public. 


2007-12-19

Unofficial translation

Market Services Department
tel + 370 5 272 14 06