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Rosneft repays part of a loan arranged for TNK-BP acquisition

December 23, 2013, 21:53 UTC+3 MOSCOW
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MOSCOW, December 23, 21:15 /ITAR-TASS/. The oil company Rosneft has repaid part of a loan obtained earlier from a group of international banks to finance the acquisition of TNK-BP.

With the early repayment announced earlier, the overall amount paid towards the settlement of the principal debt has totalled around 5.1 billion U.S. dollars the company said on Monday, December 23.

Igor Sechin, President of Rosneft, commented: “Financial standing of Rosneft allows us to repay the loans ahead of schedule, which demonstrates the Company’s responsible attitude towards responsibilities we assumed. We generate sufficient financial resources to implement our plans and, looking forward, will continue the work to reduce our external debts”.

A loan of 4.09 billion U.S. dollars (127 billion roubles) was taken from a group of foreign banks at a floating rate for five years. Another loan agreement for 12.74 billion U.S. dollars (396 billion roubles) was made with a group of foreign banks at a floating rate for two years. A third loan agreement for 11.88 billion U.S. dollars (369 billion U.S. dollars) was made with a group of foreign banks at a floating rate for two years. A fourth loan agreement for 2.33 billion U.S. dollars (73 billion roubles) was made with a group of foreign banks at a floating rate for five years.

Rosneft competed the takeover of the 100 percent of TNK-BP’s stock in March 2013. The transaction was carried out simultaneously in different corners of the globe, including the Caribbean Islands, Cyprus and Europe.

Rosneft has taken the full control of TNK-BP. Reporting to President Putin on the completion of the deal, Rosneft’s President and Chairman of the Managing Board Igor Sechin expressed gratitude to the nation's leader for his support of the company's efforts in this difficult process. He also thanked partners, including BP and its head Bob Dudley as well as all consultants and advisors, who helped in having the deal done.

“We will work hard, and we already have plans to achieve a synergy from the consolidation of assets. The company and its shareholders will be able to earn about 10 billion U.S. dollars as a result of the synergetic effect,” he said.

According to the Rosneft head, the total production by the united company will exceed 206 million tonnes of oil in 2013, with natural gas output to reach 47 billion cubic metres and the refinery rate to hit 97 million tonnes. The company will manage 2,500 refueling stations inside the country. The total earnings will expectedly reach 4.9 trillion roubles.

“We will try to increase the capitalisation in the interests of our shareholders,” Sechin concluded.

As a result of the transactions, BP receives net 12.48 billion U.S. dollars in cash, including a TNK-BP dividend of 0.71 billion U.S. dollars, and 18.5 percent Rosneft shares; Rosneft becomes holder of BP's 50 percent interest in TNK-BP in exchange for 16.65 billion U.S. dollars in cash and 12.84 percent of Rosneft shares; and OFSC ROSNEFTEGAZ sells 5.66 percent in Rosneft to BP in return for 4.87 billion U.S. dollars in cash; BP said in a statement on Thursday, March 21.

In October 2012, BP and Rosneft announced agreement in principle for the sale and purchase of BP’s 50 percent interest in TNK-BP for 17.12 billion U.S. dollars in cash and 12.84 percent of Rosneft shares.

Following adjustments in accordance with the terms of the agreement excluding a 0.71 billion U.S. dollars dividend received by BP in December 2012 from TNK-BP, Rosneft paid BP a final amount of 16.65 billion U.S. dollars on March 21.

BP used 4.87 billion U.S. dollars of the cash consideration to acquire 5.66 percent of Rosneft shares from ROSNEFTEGAZ. This amount includes the adjustment from the offer date to completion according to the terms of the purchase agreement.

As a result of these transactions BP received 12.48 billion U.S. dollars net in cash (including the 0.71 billion U.S. dollars dividend received in December 2012) and, together with its existing 1.25 percent shareholding in the company, now holds a 19.75 percent stake in Rosneft, Russia's largest oil company.

Rosneft and BP will now work together to support the integration of Rosneft and TNK-BP, ensuring the implementation of world-leading business and technological approaches.

In addition BP and Rosneft intend to identify possible opportunities for joint work on standalone projects, both in Russia and internationally.

BP initially invested around 8 billion U.S. dollars in its 50 percent interest in TNK-BP in 2003. Since then TNK-BP has grown its production by 41 percent; has replaced its reserves by an average of 125 percent a year; and has paid more than 190 billion U.S. dollars in duties, taxes and excise to the Russian government.

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