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. Last Updated: 07/27/2016

Siberian Oil Company Fights Hostile Takeover




NIZHNEVARTOVSK, Western Siberia -- Chernogorneft, the Western Siberian operator of one of Russia's most lucrative oil fields, said it is scrambling to fend off a hostile takeover by the giant Tyumen Oil Co.


If Tyumen Oil succeeds in what is expected to be a drawn-out battle, Chernogorneft will be the first-ever oil major to be acquired by a rival.


Chernogorneft officials accused Tyumen Oil this week of being a black knight by getting a Tyumen region court to reject the oil firm's creditor-appointed external manager.


"Statements made in public suggest that Tyumen Oil Co. stands behind the attempts of a group of creditors who pursue goals alien to those of most interested parties," Nikolai Smolyar, general manager of Chernogorneft, said in an interview.


The company fears that the new external manager, the previously unknown Vasily Bikin, will somehow put Chernogorneft in the hands of Tyumen Oil.


"An external manager's rights are so vast that he can do almost anything with the company," said Alexander Kirianov, the external manager who was fired Thursday by the Tyumen regional court.


"[For example,] he might try to increase the share of liabilities held by a dissenting group of creditors through faked loan agreements," he said.


"I would not exclude the possibility that assets will be transferred to other companies," said Eduard Shchapkis, president of Garant, one of Chernogorneft's contractors.


Tyumen Oil on Friday refused to say if it had an interest in Chernogorneft.


"The fate of Chernogorneft is in the hands of its creditors and external manager," said a company spokesman in Moscow. "We think that the court made the only possible proper decision."


Analysts said Chernogorneft should logically be part of Tyumen Oil but said the outcome of the ongoing battle was unclear.


"Chernogorneft extracts oil from Samotlor, precisely where Tyumen Oil operates," said Alexander Agibalov, oil and gas analyst with Aton.


"Merger with Tyumen Oil would be a logical outcome," agreed Victor Mishnyakov, oil and gas analyst with Nikoil.


But Chernogorneft definitely does not see it that way.


The last straw for the company came Thursday when the Tyumen region court decided to sack Kirianov even though he had been approved by 98 percent of Chernogorneft's creditors in December.


Kirianov, a former director at the Ryazan oil refinery who quit in a dispute with Tyumen Oil, has boasted that under his leadership Chernogorneft raised salaries, started paying taxes on time and turned a profit of 70 million rubles ($3 million) in the first quarter of 1999.


He was appointed to Chernogorneft by a court in the semi-autonomous region of Khanty-Mansiysk, where the company is located.


But a group from the remaining 2 percent of creditors complained about Kirianov and initiated legal proceedings. The Khanty-Mansiysk court denied the appeal, but its decision was overruled Thursday by the higher Tyumen court.


The appeal that resulted in Kirianov's dismissal was filed by an obscure company called Zapsiburneft, which was backed by Tyumen Oil subsidiary Nizhnevartovskneftegaz and a group of Tyumen-based enterprises.


Some of Chernogorneft's Western creditors, including the European Bank for Reconstruction and Development and Soci?t? G?n?rale, voiced their support for Kirianov during the recent court hearings.


The court, nevertheless, dismissed Kirianov and appointed Bikin, whose candidacy was supported by Zapsibburneft.


Chernogorneft supporters could be heard swearing as they left the courtroom. "The decision was made even before the hearings started," Garant's Shchapkis said.


Chernogorneft directors openly blamed the governor of the Tyumen region, Leonid Roketsky, for rigging the court decision. Roketsky acts as chairman of the board at Tyumen Oil.


New external manager Bikin will be in the driving seat for about a month until the next meeting of creditors, which should be held within30 days. The battle is not expected to end then, though. Analysts said the dispute could last for years, until all the i's are dotted and t's crossed.


Chernogorneft officials and creditors said they are trying to find a way to get an external manager of their choice, but they have not yet forged any concrete plans. "The workers could simply refuse to let the new external manager in," Shchapkis said.


In the meantime, worries are running high that the fight could turn ugly.


"I fear a dozen of people will be gunned down just in the course of several days," one of the witnesses at the court hearing in Tyumen said.


Others said Tyumen was already playing dirty. "Tyumen Oil forced us to give away our powers of attorney to vote at Chernogorneft's shareholder meetings," Shchapkis said. "They said we either cooperate with Tyumen Oil or lose our business and jobs."


Chernogorneft extracts 6 million tons of crude a year and has monthly revenues of $30 million. The company sells crude at 680 rubles ($27.80) per ton on the domestic market and fetches 2,100 rubles ($86) per ton for exports.


On paper, Chernogorneft remains a production subsidiary of Sidanko, which was until most recently part of Uneximbank's industrial empire.


Sidanko was selling crude on behalf of Chernogorneft but stopped paying for supplies of crude on time last March, Chernogorneft officials said. As a result, Chernogorneft sunk into the red and was put under receivership in December.


Sidanko, with a 75 percent stake in Chernogorneft, stills hopes to regain ownership rights, saying Friday that it would repay the $30 million owed to the oil extractor. Officials could not explain how the debt would be paid.


Chernogorneft is firmly opposed to rejoining forces with Sidanko.