Rosneft shareholders will meet on June 20 to consider amending the company’s charter which would grant BP certain veto powers on future decisions.
According to two sources close to Rosneft’s board of directors,
there is a possibility amendments will be adopted which would
authorize the purchase and sale of Rosneft shares,
Vedomosti reported.
BP sold 50 percent of TNK-BP to Rosneft in March, and increased
its shareholding in Rosneft to 19.85 percent, to become the
company’s second largest shareholder after the Kremlin.
If the new charter stipulations go through, BP will likely push
for blocking rights.
Rosneft’s spokesperson said the ‘blocking’ right would be used as
a measure to extend the ability of shareholders to increase
capital authorization. The amendment will not add any additional
shareholders to the mix.
The amendments will greatly enhance the role of minority
shareholders, like BP CEO Robert Dudley, who has been promised
one of two BP seats on the nine person Rosneft board. The second
‘BP seat’ has not yet been filled.
Under the amendments, Rosneft won’t be able to liquify, make big
deals, repurchase shares, or authorize capital, without the
approval of the shareholders.
The proposal isn’t novel in the Russian gas industry; Lukoil set
a precedent in 2005 when it changed its charter to incorporate
such a ‘blocking’ vote after ConocoPhillips bought 20 percent of
its shares.
Rosneft announced its plan to acquire TNK-BP as early as
2003, and the two companies have almost fully
integrated, with BP bosses out of the picture and Rosneft
President Igor Sechin calling most of the shots.
Since the acquisition, minority shareholders have been crossing
their fingers that Sechin will buy them out, or at least fold the
assets into the new merged company, neither which has happened.
Sechin’s lack of initiative in paying out minority shareholders
has spooked buyers and markets, and has has sent the stock price
plummeting.
On May 22, Sechin proposed that Rosneft would only be accountable
for TNK-BP dividends as of March 21, when it took control of
operations. The stock price fell from 7.140 to 6.770, over 5
percent, in 24 hours and still hasn’t climbed above the 7 dollar
mark before Sechin provoked fear that dividends would severely
decrease or be axed.
TNK-BP may follow the fate of other Russian subsidiaries bought
under large conglomerates, and may cease to exist. In order for
Rosneft to fully dissolve TNK-BP, it needs to buy out or bring in
TNK-BP Holding, which would prove difficult as 5 percent of the
shares are public and free floating.
This article originally appeared on: RT