Daily analyst comments

June 6 is the last day of trade in UES shares on the RTS and MICEX. After the session closes, a list is to be compiled of those entitled to shares in the companies to be spun off from UES. Depending on the date the shares were bought, and the position adopted at the UES AGM in October 2007, those registered as UES shareholders on June 6 will get a different number and basket of shares in the spinoff companies, following the holding company’s wind-up. Calculation of the number and structure of shares in the newly formed companies a UES shareholder will get after the company’s reorganization can be found on the company’s website at the website address: http://www.rao-ees.ru/ru/reorg/show.cgi?calc1.htm. It is noteworthy that investors who buy UES shares after June 6 will only be entitled to shares in the Federal Grid Company (Russian acronym, FSK) at swap ratios of 2.3 shares in FSK per one common share in UES and 2.1 FSK shares per UES preferred share. UES management does not recommend buying the company’s shares after June 6.

Estimates by UES management show that 99% of those registered as UES shareholders as of June 6 will get shares in the targeted structure companies on July 14. By that date, shares in nearly all of the spinoff companies should be traded on Russian stock exchanges. The only exceptions will be MRSK Holding and Far East Energy Systems, whose shares are to appear on domestic stock exchanges in the autumn. According to our estimates, shares in these two companies should constitute about 20-22% of the value of a share package a former UES shareholder would be entitled to.

We offer alternative strategies for investors that could be applied after June 6, 2008. The first option is to become a UES shareholder with a view to participating in its reorganization. Second, those registered as UES shareholders as of June 6, 2008, may lock in their gains (or losses) and then sell the shares. The choice of a specific investment strategy will hinge on investment horizon and inclination towards risks. We believe that a share package that a UES shareholder (as of June 6) will be entitled to will gain in value in the 30-40% range by year-end 2008, as compared with its price on June 5 when UES is to be wound up. Shares in the spinoff companies may correct down in July and August as some former UES shareholders may opt to sell UES shares on stock exchanges immediately after getting these shares.