Russian shareholders of TNK-BP close USD 28bn deal with Rosneft.

By bne IntelliNews December 13, 2012
Russian shareholders of country's third largest oil producer TNK-BP AAR Alliance closed a binding agreement on selling 50% stake in the company to state oil major Rosneft, Bloomberg reports citing joint statement by AAR and Rosneft. AAR is going to receive USD 28bn in cash upon completing the deal which is planned to be over by the end of H1/13. To remind, in October Rosneft reached a preliminary agreement on acquiring a 50% stake in TNK-BP from British Petroleum and another 50% from Russian shareholders of the company AAR Alliance (Alfa group, Access Industries and Renova controlled by tycoons Mikhail Friedman, Leonard Blavatnik and Viktor Vekselberg, respectively). The deal is to make Rosneft largest publicly traded oil company with daily output of more thatn 4mn barrels a day. BP and AAR are going to get about USD 26bn and USD 28bn for their respective shares in TNK-BP. BP is going to get USD 17bn in cash and 12.84% in shares of Rosneft, intending to later consolidate the stake in Rosneft to 19.75% which would make it a second largest shareholder in the company after the state with two seats on the board. BP is getting a 12% premium to the market value of the shares that are part of the deal. AAR getting USD 28bn in cash for its 50% stake in TNK-BP makes about a 40% premium to a previously estimated market price of the stake. Igor Sechin previously commented that Rosneft is going to finance the deal by own funds, foreign borrowings and bond issues. Rosneft already placed USD 3bn worth of Eurobonds: 5-year issue worth USD 1bn yielding 3.15% (guidance previously reported at 3.15%-3.2%) and 10-year issue worth USD 2bn yielding 4.2% (guidance of 4.2%-4.25%). Last week RBC reported that Rosneft is negotiating raising up to USD 32.5bn for a syndication of 15 foreign creditors to finance the USD 53bn TNK-BP oil major takeover deal. Rosneft reportedly is proposing two-year bridge loans of USD 1.75bn (total USD 24.5bn) and five-year credits of USD 500mn (total USD 8bn). The remaining funds are reportedly to be provided by Russian banks, with about 70% of the bridge-loan to be refinanced by bonds and the rest by long-term loans, limiting the amount of short term loans to 40% in a year. All "big three" rating agencies have placed Rosneft's ratings on the credit watch lists over the deal until it will be clear whether operational benefits of the deal making Rosneft one of the largest trading oil companies in the world will offset higher leverage.

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