RusHydro signed an agreement to divest JSC Chuvash Energy Retail Company
August 6, 2021. Moscow, Russia. PJSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces that it has signed an agreement with Transenergoprom to divest 100% share in JSC Chuvash Energy Retail Company.
Earlier RusHydro’s Board of Directors approved divestment of the Group’s shareholding in JSC Chuvash Energy Retail Company for RUB 300 mn according to an independent appraisal.
The transaction allows RusHydro to optimize its retail assets and improve financials. Once completed, RusHydro’s debentures will decrease by RUB 1,500 mn, the Company’s guarantees on Chuvash Energy Retail Company’s loans will be terminated and any risks of additional funding of its operations in the event of unfavorable macroeconomic factors and deterioration of consumers’ financial discipline will be eliminated.
Chuvash Energy Retail Company is the largest electricity retail company and a guaranteed electricity supplier in the Chuvash Republic. It has been a part of RusHydro Group since 2008. Since then a number of measures to improve its financial efficiency took place including optimization of operational expenses and gradual transition to reference electricity retail tariff model.
Nonetheless, continuous nonpayment by a number of major consumers in the region as well as overall deterioration of financial discipline negatively affected Chuvash Energy Retail Company’s performance compounded by high leverage which RusHydro had to cover by loan guarantees before lending companies.
In light of the above mentioned, RusHydro has made a decision to optimize its electricity retail business by means of divestment of Cuvash Energy Retail Company’s shares to Transenergoprom, a strategic investor, which offered the most favorable transaction terms. Transenergoprom has plans to expand its business in the Chuvash Republic through expansion of consumer base by offering a wide range of services in the housing and utilities sector.