Agency WPS
The Russian Oil and Gas Report (Russia)
June 20, 2005, Monday
THE STATE TO RECEIVE CONTROLLING INTEREST IN GAZPROM FOR $7.155
BILLION
The state will receive controlling interest in Gazprom already next
week. For 10.74% of its shares the gas monopoly will receive 203.5
billion roubles ($7.155 billion). The Board of Directors of Gazprom
made the relevant decision on June 16. In any case, Gazprom will see
this sum much later than its subsidiaries sell the shares.
In 2004, Gazprom produced 545 billion cubic meters of gas. In 2004,
revenue of Gazprom according to Russian standards amounted to 887
billion roubles and profit amounted to 161 billion roubles. The state
owns 38.37% of Gazprom shares, Rosgazifikatsiya has 0.9% and
subsidiaries of Gazprom (as of May 17) have 18.26%. The government
will buy out 10.74% of Gazprom shares from its subsidiaries to
increase the state-owned stake to controlling interest and to
liberalize the market of Gazprom shares. State-run company
Rosneftegaz will be the buyer.
On June 16, the Board of Directors of Gazprom finally decided how
much the company would receive from the state for 10.74% of its
shares. The stake was estimated at 203.5 billion roubles ($7.155
billion). Gazprom reports that four subsidiaries of the gas monopoly
will participate in the deal. These are Gazprombank,
Gazprominvestholding, Gazfond and Gazprom Finance BV. They will sell
10.74% of Gazprom shares to the state-run company Rosneftegaz.
Two government officials say that the state will receive the shares
in a few days but the new owner will pay for them by the end of the
year. One of the officials adds, “Rosneftegaz and Gazprom will
negotiate directly about the deadline for payment for the shares.”
The reason is that Rosneftegaz does not have money now and needs to
reach an agreement with a consortium of banks on a credit for buyout
of the shares.
The other official does not rule out that Gazprom will receive money
by autumn and Rosneftegaz will announce creation of a banking
syndicate by the shareholders’ meeting of Gazprom to be held on June
24. According to a preliminary scheme, Rosneftegaz will offer a block
of Rosneft shares as collateral to the creditors. Auditors from
2K-Audit estimated Rosneft at $26 billion. The official says that the
parties will determine the size of the stake in negotiations.
Independent member of the Board of Directors of Gazprom, Boris
Fedorov, promised to investors that Gazprom would receive money for
its shares in 2005. A source in Gazprom explains, “We are obliged to
close the deal by the end of the year, otherwise there is a risk that
it will be considered false.”
An official who participated in the meeting of the Board of Directors
of Gazprom reported that it did not take the directors much time to
approve the deal. He said, “We voted in accordance with the
governmental directive. There was no discussion.”
Proposal of the state was supported by the management of Gazprom and
independent members of the Executive Board, Boris Fedorov and CEO of
E. On Ruhrgas Burkhard Bergmann. CEO of Gazprom, Alexei Miller, who
negotiated with President of Armenia, Robert Kocharyan on June 16,
voted in a written form beforehand.
The authorities and Gazprom did not agree on the price at once. The
Board of Directors of the gas monopoly were going to approve the deal
back on June 15, but could not do this because it had no governmental
directive. The Economic Development and Trade Ministry sent a draft
directive to the government on June 14, but Prime Minister Mikhail
Fradkov did not dare sign the document. The price of 203.5 billion
roubles indicated in the directive was not suitable for Gazprom,
which counted on at least at $8-8.5 billion.
According to Fedorov, due to the indecisiveness of the Prime Minister
directors stayed in Gazprom for seven hours on June 15, and left the
office at midnight. The Prime Minister signed the directive in the
daytime on June 16.
Now Gazprom is most of all concerned about the taxes that it will
have to pay from sale of the shares. According to Fedorov, Gazprom
will have to pay $1 billion of the $7.15 billion to the state.
Managing partner of Timothy’s, Yevgeny Timofeev comments, “Any
conversation about tax allowances is political. It is legally
impossible to minimize tax payments in such a deal.”
Fedorov states that Gazprom and the government are seriously inclined
to fully liberalize the market of Gazprom shares by the end of 2005.
Fedorov concludes, “There are no reasons to stop this process. If the
government submits amendments to the law on gas supplies to the
parliament in September, they will be passed quickly and the
presidential decree limiting turnover of the company’s shares may be
abolished earlier.”
Source: Vedomosti, June 17, 2005
From: Emil Lazarian | Ararat NewsPress