Sibir Energy Real Estate Purchase Postponed

MTChigirinsky wanted to sell Sibir properties, including the Sovietskaya Hotel.
Sibir Energy stockholders postponed a decision Thursday on purchasing property from shareholder Shalva Chigirinsky after the Moscow City Hall opposed the transaction, sending Sibir higher in London trading.

Moscow's government, which holds a stake in the oil company, challenged the proposed purchase, prompting major shareholders to reassess the deal, Chigirinsky's partner Igor Kesayev said Tuesday in an interview. Chigirinsky said he has averted margin calls and has "time to re-examine" the transactions.

"I will protect all shareholders' interests and won't allow minority shareholders to be hurt," Kesayev said after Sibir's owners delayed their decision on the property deal at a London meeting. "The major shareholders should make a decision that will meet all shareholders' interests."

Sibir rose 28 pence, or 29 percent, to 124 pence in London, the highest close in a month, valuing the company at ?479.3 million ($724 million).

The global economic crisis and declining equities, which in some cases have been used as collateral to secure debts, have made it difficult for borrowers to refinance loans. Chigirinsky was exposed to "imminent margin calls" from lenders, Sibir said in a shareholder circular on its web site.

The company also said Thursday that Chigirinsky had pledged to compensate shareholders for any potential losses from buying the assets. On Dec. 3, the Russian oil producer fell 57 percent, the most since listing in 1997, after saying it would buy $340 million worth of property from Chigirinsky.

If the company has not sold the real estate by the end of June 2010, "there will be a notional sale of the property" based on an independent appraisal, Sibir Energy said in a statement. "Any aggregate loss will then be payable on demand."

Chigirinsky and Kesayev together own 47 percent of Sibir, which relies on the Siberian Salym fields for most of its oil extraction. The fields, equally owned by Royal Dutch Shell, Europe's largest oil company, produce about 147,000 barrels of crude per day.

"We were told that there are no problems now" with repaying debt, "therefore we have the possibility to use additional time to re-examine each step," Chigirinsky said. He declined to say whether he had reached a debt-restructuring agreement with lenders or explain how he would refinance his loans. "There was not a single margin call" on the debt, he said.

Sibir is not in talks on any share sale to any partner, deputy CEO Stuard Detmer said in an interview. Neither Chigirinsky nor Kesayev plans to sell stakes, they said.

"I would not exclude the possibility that there are willing buyers of the stake out there," said Artyom Konchin, an oil analyst at UniCredit in Moscow.

Sibir agreed in October to buy from Chigirinsky the Sovietsky Hotel in Moscow, built in 1952 on Stalin's orders.

Chigirinsky, whose net worth was estimated at $2.5 billion by Forbes in May, on Thursday stepped down from Sibir's nonexecutive board of directors, the company said in a separate statement.

Shareholders also agreed to buy a 50 percent stake in Korimos, a venture with the Moscow Oil Refinery that produces additives for motor fuel, and acquire full ownership of Avtocard, which operates a noncash wholesale fuel payment system. Sibir will complete the acquisitions for a combined $160 million, the company's web site said.

Sibir intends to spend about $300 million on projects next year, in line with this year's investment, Detmer said. The company has applied for a license to tap the Koltogorsky fields after finding about 260 million barrels of oil and gas resources during exploration.