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Rosneft in case of buyback will be able to sell its shares on market

November 08, 2016, 21:00 UTC+3 ROME

Investors willing to participate in privatization of 19.5% shares of Rosneft should make binding proposals in the near future

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© AP Photo/Mikhail Metzel

MOSCOW, November 8. /TASS/. Rosneft, if it buys 19.5% of its shares from Rosneftegaz, will be able to resell them on the market, Economic Development Minister of Alexei Ulyukayev told reporters.

"Yes, of course, and not just in the future but in the near future, the Minister said.

Earlier a source in the financial and economic bloc of the government told reporters that if Rosneft buys back own shares from Rosneftegaz it will be only "an interim procedure" and in the first quarter of 2017 the oil company would be obliged to sell the shares to real investors.

Ulyukayev confirmed that the possible buyback is a transit operation, which "simply allows (the authorities) to get money for the budget already in 2016, and to close the privatization deal in 2017."

Earlier media reported that Rosneft may buy back 19.5% of its shares intended for privatization from Rosneftegaz.

Rosneft’s spokesman and Vice President Mikhail Leontyev said that Rosneft was seriously considering a possibility of buying its own shares, because it sees a "colossal potential" to increase the company’s capitalization.

The Intesa Bank which acts as an investment consultant on the company’s privatization, assessed the company’s stake at about $11 bln, according to media reports.

Under the directive approved by the government, the package of Rosneft (19.5%) should be sold at a price which is not less than 748.26 bln rubles ($11.7 bln) multiplied by a corrective ratio of 0.95. The deal should be closed not later than December 5, 2016. The settlement with the buyer should be completed not later than December 15, 2016.

Rosneftegaz manages Russian state owned oil and gas assets. It holds more than 69.5% in Rosneft.

Binding proposals

According to Ulyukayev, investors willing to participate in privatization of 19.5% shares of Rosneft should make binding proposals in the near future.

"Under the schedule binding proposals are to be made very soon, in November," he said.

Ulyukayev added that his ministry expects Rosneftegaz to provide information about potential contenders for the stake in Rosneft.

On Monday, Russia’s First Deputy Prime Minister Igor Shuvalov approved the directive addressed to the government’s representatives in Rosneftegaz company on privatization of 19.5% in state owned oil company Rosneft.

The relevant document has been published on the government’s website.

Rosneftegaz manages Russian state owned oil and gas assets. It holds more than 69.5% in Rosneft.

The directive obliges the state representatives (members of Rosneftegaz Board of Directors) to hold the board’s meeting and to put Rosneftgeaz participation in Rosneft on the agenda of that meeting

Under the directive, the board members should vote for the transfer of 2.066 bln ordinary shares of Rosneft (which is 19.5% of the company’s charter capital).

The price of the stake should be not less than 748.26 bln rubles ($11.7 bln) multiplied by a corrective ratio of 0.95.

The deal should be closed not later than December 5, 2016. The settlement with the buyer should be completed not later than December 15, 2016.

Earlier on Monday, Economic Development Minister Alexei Ulyukayev said that the minimal price of 19.5% in Rosneft was be set on base of share listing as of October 11 - 748.29 bln rubles ($11.7 bln).

The Russian government wants to sell 19.5% of Rosneft shares before the end of 2016 to raise funds to cover the budget deficit.

Shuvalov said that earlier that the cabinet was preparing a relevant directive and plans to sell the stake to "real investors".

He said that the buyback of Rosneft shares is possible in case the government fails to receive all the funds from privatization of the company to the budget by the end of 2016. He added that the buyback is considered only as a temporary measure.

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