Investors eagerly await Rosneft IPO, Petronas among bidders


  • Nation
  • Friday, 14 Jul 2006

ST. PETERSBURG, Russia: Investors on Friday eagerly awaited the pricing for shares in OAO Rosneft, the state-run oil giant that became Russia's third largest crude producer after the politically charged dismantling of the Yukos oil group. 

As much as US$6 billion in provisional bids have reportedly been pledged by BP PLC, China National Petroleum Corp. and Malaysia's Petronas, while interest from Russian citizens has been estimated at as high as US$1 billion. 

The share offering is expected to be Russia's largest ever. 

Preparations for the highly anticipated offering come as Russia shows off its oil-fueled economic clout, hosting leaders from the world's richest democracies in St. Petersburg for the Group of Eight summit that starts Saturday. 

Despite the anticipation, the listing on the London Stock Exchange and Russian bourses - expected to bring US$10-11 billion (euro7.9-8.7 billion) - has been dogged by OAO Yukos, which has sought to stop the IPO, scheduled for next Wednesday. 

Late Thursday, the company sought a last-minute injunction at a British court.  

It was unclear whether the injunction would be granted. 

Dow Jones Newswires, citing an unnamed source, said the shares would be priced at US$7.55 - at the high end of their price range, putting the value of the company close to US$80 billion. 

Negotiators had worked through the night to hammer out a price, which is due to be officially announced Friday.  

Rosneft is looking to raise around US$10 billion in the offering, people familiar with the negotiations told Dow Jones. 

Bankers say investors' appetite has awoken and the offering is reportedly more than 1 1/2 times oversubscribed. 

As much as US$6 billion in provisional bids have reportedly been pledged by BP PLC, China National Petroleum Corp. and Malaysia's Petronas, while interest from Russian citizens has been estimated at as high as US$1 billion. 

Despite the added threat of turbulence on world markets amid fears of U.S. interest rate hikes, the Dow Jones cited sources as saying the company was aiming to earn US$10 billion form the placement. 

The IPO is primarily intended to raise money to pay some US$8.5 billion in loans the state took out to acquire control over natural gas monopoly OAO Gazprom last year. 

But critics have called the IPO a bid to clean up the Kremlin's attempt to gain control of Yukos. 

Some 70 percent of OAO Rosneft's 1.6 million barrels of daily production comes from Yuganskneftegaz, a giant west Siberian oil complex with the output of Indonesia that once belonged to Yukos. 

Rosneft acquired Yuganskneftegaz at a knockdown price - turning it into Russia's third biggest oil producer overnight - after a disputed government auction in 2004 against Yukos' multibillion dollar (euro) back tax bills. 

Yukos spokeswoman Claire Davidson told The Associated Press that the company had filed with the London High Court after British regulators rejected Yukos' attempt to block the IPO earlier this week, asking for a judicial review of its claim. 

Yukos said it hoped for a hearing and a judgment, before Rosneft shares are due to begin trading on Wednesday, or at the least a temporary injunction. 

The London Stock Exchange in a notice to its members said Thursday that a plaintiff had sought an injunction to stop trading in Global Depositary Receipts of Rosneft upon completion of its initial public offering. 

Davidson said the British financial regulator, the Financial Services Authority, and the London Stock Exchange "should be protecting the interests of shareholders.'' 

In a review submitted in June, Yukos argued to the Financial Services Authority that Yuganskneftegaz had been expropriated and the listing would therefore constitute the sale of stolen property. But the FSA rejected that appeal and gave the green light for Rosneft to list its shares next week. 

Yukos was once Russia's biggest crude producer, but the company was carved up by authorities to pay off a disputed back tax bill of US$27.5 billion.  

Observers say the dismantling was punishment for the political ambitions of its jailed founder Mikhail Khodorkovsky and part of a state drive to reacquire influence in the strategic oil sector. 

The campaign against Yukos left Khodorkovsky in a Siberian prison camp, the oil company in receivership and foreign investors poorer to the tune of billions as its share price collapsed. 

But while valuing it at close to US$80 billion. 

The last-ditch legal action mirrors efforts by Yukos to halt the auction of Yuganskneftegaz in December 2004 through U.S. court appeals. 

This forced the Russian government to abandon plans for Gazprom to buy the vast oil unit and instead a mystery shell company acquired Yuganskneftegaz and shortly afterward sold it onto Rosneft. - AP 

Earlier report 

MOSCOW (AP) - Stricken Russian oil group OAO Yukos has filed for a British court injunction in an eleventh-hour bid to halt an expected US$10-11 billion (euro7.9-8.7 billion) initial public offering of shares by the state-owned Rosneft oil company. 

As much as US$6 billion in provisional bids have reportedly been pledged by BP PLC, China National Petroleum Corp. and Malaysia's Petronas, while interest from Russian citizens has been estimated at as high as US$1 billion. 

The pricing for Rosneft's IPO is due to be announced in London early Friday. 

The listing, which is due to take place on Wednesday on the London Stock Exchange and Russian bourses, is controversial: Some 70 percent of OAO Rosneft's 1.6 million barrels of daily production comes from Yuganskneftegaz, a giant west Siberian oil complex with the output of Indonesia that once belonged to Yukos. 

Rosneft acquired Yuganskneftegaz at a knockdown price - turning it into Russia's third biggest oil producer overnight - after a disputed government auction in 2004 against Yukos' multibillion dollar (euro) back tax bills. 

The IPO - which will be Russia's biggest ever - is primarily intended to raise money to pay some US$8.5 billion in loans the state took out to acquire control over natural gas monopoly OAO Gazprom last year. 

But critics have called the IPO a bid to clean up the Kremlin's attempt to gain control of Yukos.  

Yukos spokeswoman Claire Davidson told The Associated Press that the company had filed with the London High Court after British regulators rejected Yukos' attempt to block the IPO earlier this week, asking for a judicial review of its claim. 

Yukos said it hoped for a hearing and a judgment, before Rosneft shares are due to begin trading on Wednesday, or at the least a temporary injunction. 

The London Stock Exchange in a notice to its members said Thursday that a plaintiff had sought an injunction to stop trading in Global Depositary Receipts of Rosneft upon completion of its initial public offering. 

Davidson said the British financial regulator, the Financial Services Authority, and the London Stock Exchange "should be protecting the interests of shareholders.'' 

In a review submitted in June, Yukos argued to the Financial Services Authority that Yuganskneftegaz had been expropriated and the listing would therefore constitute the sale of stolen property. 

But the FSA rejected that appeal and gave the green light for Rosneft to list its shares next week. 

Yukos was once Russia's biggest crude producer, but the company was carved up by authorities to pay off a disputed back tax bill of US$27.5 billion.  

Observers say the dismantling was punishment for the political ambitions of its jailed founder Mikhail Khodorkovsky and part of a state drive to reacquire influence in the strategic oil sector. 

The campaign against Yukos left Khodorkovsky in a Siberian prison camp, the oil company in receivership and foreign investors poorer to the tune of billions as its share price collapsed. 

But bankers say investors' appetite has awoken and the offering is reportedly more than 1 1/2 times oversubscribed.  

As much as US$6 billion in provisional bids have reportedly been pledged by BP PLC, China National Petroleum Corp. and Malaysia's Petronas, while interest from Russian citizens has been estimated at as high as US$1 billion. 

Despite the added threat of turbulence on world markets amid fears of U.S. interest rate hikes, the shares will reportedly be priced at the top of an original range of US$5.85-US$7.85.  

That would earn the company US$11.6 billion from the sale of the full 14.9 percent of its shares while valuing it at close to US$80 billion. 

The last-ditch legal action mirrors efforts by Yukos to halt the auction of Yuganskneftegaz in December 2004 through U.S. court appeals. 

This forced the Russian government to abandon plans for Gazprom to buy the vast oil unit and instead a mystery shell company acquired Yuganskneftegaz and shortly afterward sold it onto Rosneft. - AP 

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