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. Last Updated: 07/27/2016

LUKoil To Sell Off 15 Percent

Russia's largest oil company, LUKoil, expects non-strategic investors to buy a 15 percent stake of government-owned stock in the form of American Depositary Receipts, or ADRs, by the end of the year, a top official said Thursday.

"We expect this 15 percent to be in the form of level-three ADRs," LUKoil Vice-President Leonid Fedun and head of securities at LUKoil said. "I'm not looking for a strategic investor -- I'm looking for financial investors."

Fedun said terms had not been settled and discussions with the U.S. Securities and Exchange Commission on the ADR issue might last until August or September while auditors complete the necessary three years of international standard accounts.

"By the plan, the privatization should be by the end of the year -- but not much sooner," he said.

Fedun said the 15 percent stake probably would be sold in a commercial tender with investment conditions and anticipated that a consortium or consortia of Russian and foreign banks would win the tender and redistribute the shares in ADR form.

The oil firm also announced Thursday that it had received approval from the U.S. Securities and Exchange Commission to issue level-one ADRs on its preferred shares. One ADR will correspond to two LUKoil preferred shares, it said in a statement.

LUKoil already has a program for ADRs based on its ordinary shares. These ADRs are listed in Berlin, Frankfurt and on the NASDAQ bulletin board. The oil firm has 65.01 million preferred shares, amounting to 9.1 percent of its capital.

After falling earlier in the week from a Monday high of $15.69, LUKoil shares jumped Thursday on news of the ADR issues, rising 2.12 percent over Wednesday's close to $15.42. The rise comes despite comments by Fedun that profits, by Russian accounting standards, may slip in 1997 due to increased development spending.

Oil output for January, however, was up 3 percent compared with the same period in 1996, Fedun said.