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. Last Updated: 07/27/2016

Sibneft Charter Aimed At Improving Relations




Russian oil company Sibneft issued a corporate governance charter Thursday, which the company's president said was designed to bring it into line with international standards ahead of a planned listing.


Yevgeny Shvidler, who became Sibneft's president earlier this week following the resignation of Andrei Blokh, said that the publication of the charter was unrelated to a recent high-profile dispute with a minority shareholder.


"This is not a response to what Mr. Dart is doing," he said, referring to U.S. investor Kenneth Dart, whose firm Navaromco, a minority shareholder in Sibneft's chief production subsidiary Noyabrsk-neftegaz, is in dispute with Sibneft.


"The decision to launch the charter was raised a year ago," Shvidler said.


"There were obvious cases of shareholder rights abuses at the beginning of perestroika," he added, citing cases at unrelated firms where names were simply taken off the register of shareholders.


"We thought in November or December a corporate governance charter would be a good declaration of what we'd like to achieve in corporate governance and in the relationship between shareholders, management and the authorities."


He said Sibneft intended to become more transparent in its operations. "The greatest value is not in current income but in what the market says you're worth," he said, adding this was part of the reason behind the new charter.


The charter, aimed at "the investing public, analysts, market authorities and other Russian companies," sets out how Sibneft proposes to carry out its business, Shvidler said.


One of its provisions is to bring independent nonexecutive directors onto the board. The independent directors would have at least 25 percent of the board or three directors, whichever was the greater.


Sibneft's dispute with Navaromco concerns a proposed share swap at Noyabrskneftegaz. Sibneft intends to consolidate shares in Noyabrsk into a single company with a common share by Nov. 1, Shvidler confirmed.


Sibneft has said it would issue 500 million new voting shares and offer eight of those for each ordinary Noyabrsk share, and four ordinary Sibneft shares for each Noyabrsk preference share.


Navaromco representatives believe the swap ratio is far lower than the real economic value of the assets suggest it should be. But Shvidler has no plans to change the proposed terms.


"Will we change the course of what we're doing? I don't think so. Of course, we can make mistakes, but I don't think we're doing anything wrong," he said. "There's no reason to change the rate."


Sibneft also plans to consolidate its Omsk refining subsidiary next year, but Shvidler said the details have not yet been worked out.


He said the dispute with Navaromco was not a problem for him personally, but added that "for the company it takes up unnecessary time."


Navaromco has lost a lower court ruling on Noyabrsk share issues but is expected to appeal.


Sibneft is also in advanced negotiations with French oil company Elf Aquitaine over the purchase of a stake by Elf, likely to be between 12 and 15 percent of Sibneft, although Shvidler did not give details of the current status of the talks.


Sibneft is also looking for another foreign partner, probably to take a similar-sized stake.


"The basic idea was to have two partners rather than one," Shvidler said.


He added that Sibneft started with a list of 40 possible partners, but now "the list has narrowed. We're in negotiations with a small number." He, however, did not name them.