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. Last Updated: 07/27/2016

Shareholders OK YukosSibneft

Oil firms Yukos and Sibneft said Wednesday their shareholders had signed a final merger deal to create the country's largest oil producer able to compete with Western supermajors.

The merger, seen by most analysts as an acquisition of Sibneft by Yukos, will be the biggest in the country's corporate history and is valued at around $12 billion.

The two firms said in a statement that Sibneft's main shareholders had confirmed an earlier intention to sell 20 percent minus one share in Sibneft to Yukos for $3 billion.

Sibneft's main shareholders also agreed to swap their remaining 72 percent plus one share in Sibneft for 26.01 percent of the combined firm, YukosSibneft.

The two companies also said Yukos and Sibneft would make their debt level proportional to assets before the merger, while the debt level of the combined firm would not exceed $5 billion.

Yukos and Sibneft, Russia's No. 2 and No. 5 oil producers, said last month they would merge by the end of 2003 to create the world's fourth- largest oil-producing company.

The combined firm will produce 2.3 million barrels per day of crude oil, putting it on a par with OPEC member Kuwait and giving it 29 percent of crude oil production in Russia, the world's second-largest oil exporter.

The merged company will have a combined market value of around $35 billion, making it by far the largest company on Russia's stock exchange.

Analysts have seen Sibneft's high debt level compared with Yukos' modest leverage as a possible obstacle to the deal.

Sibneft's debt stands at around $2.4 billion, while Yukos has a debt of $600 million and spare cash of about $5 billion.

Yukos said last week it could borrow $3 billion to pay for 20 percent of Sibneft and issue an extra 1 billion ordinary shares to facilitate a swap.

Analysts have said Yukos could also pay billions of dollars in dividends prior to the merger.

Sibneft said Tuesday it would cut its short-term debt by $700 million due to the sale of a minority stake in a producing unit to rival Tyumen Oil Co.

The firm said it did not plan to redeem eurobonds totaling $900 million, which mature in 2007 and 2009, ahead of schedule.

 Yukos said Wednesday its oil and refined products exports jumped in the first quarter by 48 percent and 68 percent, respectively, due to rising output and new shipping logistics.

Yukos is one of the country's fastest-growing oil firms, currently producing every fifth barrel in Russia.

Yukos said new transportation routes had allowed it to export 59 percent of its oil output in the first quarter of 2003.

Oil firms are allowed to export only 33 percent of their output via the Transneft pipeline monopoly.

Yukos said it had exported 11.3 million metric tons (920,000 bpd) of crude oil in the first quarter, up 48.2 percent from the first quarter of 2002.