Meetings of the Boards of Directors of Rosneft and its main subsidiaries were held on April 17, 2006 during which a number of issues relating to Rosneft’s reorganization through a consolidation of its subsidiaries were reviewed.
The consolidation will facilitate further improvements in the company’s management systems and corporate governance and is expected to lead to lower costs and higher efficiency. The consolidation is a key milestone in Rosneft’s ongoing reorganization into a unified, vertically-integrated company, and will serve as further catalyst to Rosneft’s continuing transformation into a world class oil and gas company. Rosneft is expected to rank amongst the world’s leading public oil and gas companies in terms of proven hydrocarbon reserves, and to rank amongst the top ten in terms of production levels.
The Boards of Directors of Rosneft and its subsidiaries have recommended conversion ratios of the subsidiaries’ shares into Rosneft shares, the buy-out price for shares in the event minority shareholders elect not to swap, and the conditions and the procedure for Rosneft’s reorganization, as set forth in the agreements on the consolidation of the subsidiaries, to be approved at upcoming shareholder meetings.
The consolidation program was developed with the participation of international professional financial consultants, including ABN Amro, Dresdner KleinwortWasserstein, Morgan Stanley, JP Morgan. The Rosneft Board of Directors has approved consultancies’ proposals and approved Rosneft’s consolidation time-table.
Implementation of the consolidation program should be complete by November 2006.
The share conversion ratios were calculated in accordance with Russian law and high standards of international market economy on the basis of independent valuations conducted by Deloitte & Touche and prove all shareholders rights protection.
Twelve core subsidiaries of Rosneft have been identified for the consolidation: Rosneft-Krasnodarneftegaz, Rosneft-Purneftegaz, Rosneft-Sakhalinmorneftegaz, Rosneft-Stavropolneftegaz, Yuganskneftegaz, Severnaya Neft, Selkupneftegaz, Rosneft-Komsomolsk Refinery, Rosneft-Tuapse Refinery, Rosneft-Arkhangelsknefteprodukt, Rosneft-Nakhodkanefteprodukt and Rosneft-Tuapsenefteprodukt.
During Rosneft’s reorganization, minority shareholders will be granted the opportunity to convert their shares into shares in the consolidated company, or to sell at least a portion of them for cash as provided for under Russian law. Relations with minority shareholders within the context of the consolidated company will be built on the basis of constructive cooperation and respect for the interests and rights of all shareholders.
Rosneft’s Board of Directors has called a general meeting of the company’s shareholders for June 2, 2006 for the adoption of a decision on its reorganization in the form of the consolidation of the subsidiaries and the approval of the agreements on the consolidation of the subsidiaries.
The Boards of Directors of the subsidiaries have called general meetings of shareholders of the subsidiaries for June 2, 2006 for the adoption of a decision on their reorganization in the form of their consolidation, the approval of the consolidation agreements and the approval of the acts of transfer.
On this same day, a joint general meeting of shareholders of Rosneft and the subsidiaries is planned for the introduction of amendments and addenda to Rosneft’s charter pertaining to the company’s legal succession in respect of the merging subsidiaries as a result of the reorganization.
Prior to the holding of the meetings, shareholders of the subsidiaries will have the opportunity to familiarize themselves with the documents stipulated by applicable law and corporate procedures, including the financial statements of Rosneft and the merging subsidiaries and the valuation reports of Deloitte & Touche.
The approved conversion ratios for subsidiary shares into Rosneft shares are as follows:
? |
Company name |
Category of shares |
Conversion ratio |
1 |
Rosneft-Krasnodarneftegaz |
common
privileged |
0,835367137
1,193417493 |
2 |
Rosneft-Purneftegaz |
common
privileged |
0,164012640
0,218685026 |
3 |
Rosneft-Sakhalinmorneftegaz |
common
privileged |
0,335141066
0,446851612 |
4 |
Rosneft-Stavropolneftegaz |
common
privileged |
0,041565579
0,059379510 |
5 |
Yuganskneftegaz |
common
privileged |
0,000000009
0,000000013 |
6 |
Severnaya Neft |
common |
0,000000053 |
7 |
Selkupneftegaz |
common |
0,000000980 |
8 |
Rosneft-Komsomolsk Refinery |
common
privileged |
0,144729168
0,206756493 |
9 |
Rosneft-Tuapse Refinery |
common
privileged |
0,109467619
0,156382005 |
10 |
Rosneft-Arkhangelsknefteprodukt |
common
privileged |
2,656741385
3,794982079 |
11 |
Rosneft-Nakhodkanefteprodukt |
common
privileged |
0,043678186
0,062397360 |
12 |
Rosneft-Tuapsenefteprodukt |
common
privileged |
0,945132111
1,350280565 |
Rosneft’s Board of Directors has also called an extraordinary general meeting of shareholders for June 7, 2006 to approve the revised charter and further internal documentation reflecting amendments consistent with corporate governance practices of public companies. It is also intended that 3 new independent Directors will be elected to Rosneft’s Board at this meeting.
In addition to these decisions, Rosneft’s Board of Directors has approved the company’s new Management Board, comprising: Rosneft President Sergei Bogdanchikov (Chairman), First Vice-President Nikolai Borisenko (Deputy Chairman), First Vice-President Sergei Kudryashov, Vice-Presidents Anatoly Baranovsky, Stepan Zemlyuk and Rizo Tursunov, Chief Accountant Antonina Kim and the Director of the Group of Financial Advisors to the Company’s President, Vice-President Peter O’Brien.
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