Page 19 - FSUOGM Week 21

FSUOGM
NEWS IN BRIEF
FSUOGM
RUSSIA
Russian Lukoil oil major
risks $0.7bn loss on
diamond asset sale revision
Russian oil major independent Lukoil could face losses, as the Federal Antimonopoly Service (FAS) watchdog and the Central Bank of Russia (CBR) are looking to revoke the $1.45bn sale of AGD Diamonds to bailed Financial Corporation (FC) Otkritie.
FC Otkritie was the most expensive bailout during the CBR 2017 sector clean-up, costing close to $8bn in capital injections, deposits and other support measures that were only partially recovered.
As reported by bne IntelliNews, the CBR previously planned to IPO the bailed and restructured bank in 2021, but these plans are now likely to be postponed.
In 2017 Lukoil sold AGD Diamonds to FC Otkritie and now the FAS has filed a lawsuit in the Arkhangelsk region court to invalidate the purchase, claiming that the deal price was 2x overvalued.
The deal also allegedly violated the foreign investment law by not providing citizenship information on the beneficiaries of the buyer. AGD Diamonds controls one of the largest diamond mines in Russia and is a strategic enterprise that would require such disclosure.
The news is slight negative for Lukoil, BCS Global Markets believes, estimating that the cancellation of the sale could result in a $700mn revaluation loss, and carries about 2% downside risk for the company’s share in the most pessimistic scenario.
In May, Otkritie Holding, the former owner of FC Otkritie, defaulted on its RUB22.5bn ($300mn) coupon and RUB7bn mandatory buyout offer on its 2027 RUB60bn eurobonds. AGD Diamonds is the only asset remaining on its balance sheet.
“It is difficult to predict the outcome
of the court hearing, and we note that the FAS itself approved the deal back in 2017,” Sberbank CIB wrote on May 26, while seeing the risks as manageable for Lukoil.
“Even if the deal can somehow be reversed, the company would get the diamond assets back,” Sberbank argues, while reminding that Lukoil stressed before that all M&A deals would be financed through debt and not at the expense of dividends. Currently the company has negligible net debt and $8bn in cash on its balance sheet.ak electricity prices in Europe in 1Q20.
Russia’s Rosneft claims
$0.6bn damages from RBC
business portal
Russian business portal and publisher RBC faces RUB43bn ($0.6bn) in compensation payments in a legal claim by Russian oil giant Rosneft for the publication by RBC that Rosneft is linked to a temporary 0.4% dive in its share price.
As reported by bne IntelliNews, a joint investigation between The Bell, Medusa, Forbes and Vedomosti showed that Rosneft has taken control of another Russia’s leading independent newspapers, Vedomosti.
The RBC’s article in question claimed that one of Rosneft’s security arms has received a stake in Rosneft’s Venezuelan projects as it was reshuffling toxic assets to avoid US sanctions.
The damages claimed by Rosneft
exceed RBC’s revenues 7-fold (RUB5.9bn ($83.1mn) in 2019). Rosneft had previously sued RBC in 2016 for its coverage of the murky privatisation of a 19.5% stake in the state major.
Slavneft sets guidance for RUB10bn bonds at 6.1%
Russian oil company Slavneft has set the final coupon guidance for 10 billion ruble 10-year exchange bonds at 6.10% annually, which corresponds to a 6.24% yield to a 5-year buyback offer, a financial source told PRIME on May 26.
Initially, the coupon guidance was set at 6.15–6.25% annually, it was later cut to 6.00–6.10% annually.
The issue carries quarterly coupons. It also envisages a 1-year call option.
Bids are collected on Tuesday.
The technical placement is preliminarily scheduled for June 16.
Brokerage company Region and Credit Bank of Moscow will act as organisers.
Energy Min sees oil market surplus ending in June-July
The Russian Energy Ministry believes that the oil market balance will be attained in June or July, Minister Alexander Novak said on May 24.
There is still market surplus, despite OPEC+ efforts, of around 7-12mn barrels per day but this should disappear by June or
July, according to the ministry.
EASTERN EUROPE
Putin rejects calls from
Armenia, Belarus for
uniform EEU energy tariffs
Russia’s President Vladimir Putin has dismissed calls from Armenia and Belarus calls for
the Eurasian Economic Union (EEU) to set uniform energy tariffs and thus cut the cost
of the Russian natural gas they are heavily dependent on.
A single EEU market for natural gas and other fuels would bring about the same
gas prices for gas-exporting Russia and
the four other members of the Russian-
led trade bloc—namely Armenia, Belarus, Kazakhstan and Kyrgyzstan. The Russian gas price for domestic consumers has always been significantly lower than what is charged to Armenia and Belarus.
Armenia’s Prime Minister Nikol Pashinian lobbied for uniform gas tariffs during a May 19 video-conference with
the presidents of the four other EEU members, saying: “A single market for energy resources functioning under non-discriminatory principles must be
one of the foundations of our integration. Qualitative progress in integration processes is impossible without it. It is impossible to ensure equal economic conditions for all participants of the union without it.”
But Putin implied that Yerevan and Minsk would have to consent to even deeper economic integration with Moscow before the concept would even be considered.
“As regards a common tariff for shipments and transit of gas proposed by our Armenian and Belarusian friends, we believe that it can be introduced only in a [broader] single market with a single budget and a single system of taxation,” he said, as cited by RFE/RL.
“In the meantime, gas prices must be set on the basis of market conditions ... I want to stress, my dear colleagues, that this is common international practice,” added Putin.
Belarusian President Aleksandr Lukashenko griped last month that Belarus is now paying more for Russian gas than European Union member states.
Week 20 20•May•2020
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