Tyumen launches next phase for international capital markets entry
Tyumen Oil has launched the next phase of preparations for entry into international capital markets with approval of
plans to merge its four crude oil production subsidiaries. The boards of directors of Samotlorneftegas,
Nizhnevartovsk Oil Production, Tyumenneftegas and TNK-Nyagan voted to approve reorganizations by exchanging stock
with that of their parent company, Tyumen Oil. The subsidiaries account for most of Tyumen Oil's value.
"The mergers of our subsidiaries will help increase Tyumen Oil's value, attract investment, increase the transparency of the subsidiaries' structure and operations to government regulators and debt and equity investors; and facilitate transfer of the subsidiaries' equipment and production licenses to Tyumen Oil," said Joseph Bakaleinik, Tyumen Oil's CFO.
The reorganization is among several steps Tyumen Oil is taking to prepare to tap international debt and equity markets. The company is considering an international bond offering in mid-2001.
To ensure fairness and the protection of minority shareholders' rights in the reorganization, Tyumen Oil asked the
Russian government's Federal Securities Markets Commission to review its plans and hired the independent American
auditing firm Ernst & Young to determine the subsidiaries' valuations and the value of their shares.
"The federal commission's main goal is to protect shareholders' and investors' rights," Gennady Kolesnikov, deputy chairman of the Federal Securities Markets Commission, said at a Tyumen Oil company briefing on the reorganization. "Monitoring Tyumen Oil's reorganization enables the Federal Securities Markets Commission to guarantee that minority shareholders' rights will not be harmed."
The decisions of the subsidiaries' boards are to be presented to their companies' shareholders for final approval in February. Tyumen Oil's board of directors will then meet in April to approve the plan and consider issuing new shares. The plan then goes to Tyumen Oil's shareholders for final approval.
Under the plan, shareholders in the oil production subsidiaries will exchange their stock for Tyumen Oil shares. The subsidiaries' assets, liabilities and licenses will be transferred to Tyumen Oil by the third quarter of 2001. Tyumen Oil's refining and marketing subsidiaries are to be merged beginning next autumn.
Tyumen Oil, established in 1995 and owned by the Russian Alfa Group and US-Russian Access/Renova, has crude oil reserves of more than 8.2 bn barrels and refines more than 660,000 bpd. It ranks No. 2 in reserves and No. 4 in production among Russian oil companies, and was named the world's "Best Oil and Gas Company" of 2000 by Financial Times Energy. Tyumen Oil owns and franchises a chain of nearly 800 branded retail gasoline stations in Russia.