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Oleg Korolev / Vedomosti
Mikhail Fridman's Alfa Group has feuded with Roman Abramovich's Sibneft for years.
By the end of the year, Sibneft is to receive an 8.6 percent equity stake in the offshore company TNK International Ltd., the main shareholder in the TNK and Onako oil holdings. In exchange, TNK is to receive a 40 percent stake of the Orenburgneft drilling company.
Virgin Islands-registered TNK International Ltd. has a charter capital of $50,000 and is 100 percent owned by TNK Industrial Holdings Ltd., also an offshore company, which is in turn owned by Alfa Group and Access/Renova.
TNK International's main assets include more than 90 percent of Onako, 29 percent of and 88.5 percent of the Ukrainian LINOS factory.
TNK International and Sibneft have been negotiating an exchange of oil assets for the past two years.
The reason for the drawn-out negotiations was the privatization of Onako in 2000, when Sibneft bought a 42 percent stake in its subsidiary, Orenburgneft, while 85 percent of Onako was auctioned off to TNK's owners, Alfa Group and Renova. The two competitors were forced to negotiate the division of the assets.
At the beginning of last year, they announced that Onako would be converted into a single share and Sibneft would get a 33.3 percent stake in the consolidated company. But at the last minute, Sibneft pulled out of the exchange. The company wanted an option to sell its TNK stake at its own price, but TNK did not agree.
Last week, however, the owners of the two holdings reached a new agreement. On Monday, Alfa Group head Mikhail Fridman said in a statement that Sibneft would agree to trade its stake in Orenburgneft for about 8.6 percent of TNK International. He said the arrangement could be finalized before the end of the year.
Sibneft president Yevgeny Shvidler confirmed that the two companies had agreed to exchange assets, but declined to give any details.
Both parties view the deal as a win-win situation. Sibneft, which made $120 million from its stake in Orenburgneft last year, will now get a stake in the profits of a much larger company, while TNK will not have to spend money on buying out Sibneft shares.
A source close to the negotiations said Sibneft would get a seat on the TNK International board of directors in addition to a stake in the company.
"This will allow the new shareholder to have access to all the necessary information and participate in making important decisions," said the source.
In addition, Sibneft will have the opportunity to cash in on the sale of its stake in the holding company in the future because TNK International's owners have said they plan to float the offshore's shares on international financial markets.
Nevertheless, some TNK projects will remain outside the reach of Sibneft when it becomes a shareholder in TNK International. Not all of TNK's assets, such as the controlling stake in Sidanco, are held through the company. These assets belong to Sborsare, a Cypriot offshore company representing the interests of Alfa Group and Access/Renova. BP owns another 25 percent of the holding.
Fridman said Sidanco will not become part of TNK International for another year or two. TNK is not ready to create a consortium for the privatization of with Sibneft either, the head of Alfa Group said.
"Only a few years ago it was impossible to imagine a Russian company allowing a competitor into its business," said Aton analyst Steven Dashevsky.
"We can be happy that oligarchs have learned how to solve their corporate differences in such a civilized manner," he said.
Nevertheless, the market is waiting to find out the conditions TNK International will offer other shareholders of Onako and Orenburgneft on exchanging shares, Dashevsky said.
"It is important that the minority holders get conditions that are as good as Sibneft's," he said.
"That is the only way Alfa Group and Access/Renova will be able to demonstrate their support for international standards of corporate governance."
