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. Last Updated: 07/27/2016

Rosneft Sticking to Loan Plan: Report

Subsidiaries of Rosneft will go ahead with shareholders' meetings to approve a borrowing scheme to lend the parent company about $5.5 billion, Interfax reported Tuesday, citing an unidentified person on Rosneft's board.

The announcement flies in the face of a report that a senior Kremlin official had ordered Rosneft president Sergei Bogdanchikov to cancel shareholders' meetings intended to approve a complex scheme involving promissory notes, or veksels, from an unknown company.

"The shareholders' meetings of Rosneft units will take place on Feb. 28 and look at the question of lending to Rosneft and the sale of veksels," the board member said, Interfax reported. "There is no reason to change or cancel these meetings."

Analysts believe the loan to be linked to the financing of state-owned Rosneft's controversial purchase of Yuganskneftegaz, which was auctioned off by the government in December to recoup some of Yukos' towering tax debt.

A shell company, which Rosneft later bought, won the auction with a $9.3 billion bid. Questions have swirled ever since how the debt-laden oil company could have come up with the cash.

Last week, media reported that three Rosneft subsidiaries -- Purneftegaz, Sakhalinmorneftegaz and Stavropolneft -- are set to decide on a plan to lend Rosneft $5.5 billion. The loans, which are up for approval at extraordinary shareholders meetings, would be financed by sales of veksels to an unknown company called Trade-Express.

The Rosneft board, which controls all three units, will meet on Thursday and Friday, Interfax said.

Vedomosti reported Monday that some Kremlin officials were not amused by Rosneft's borrowing plans, which an unidentified official in the presidential administration said would complicate the merger of Rosneft into Gazprom.

The Interfax report followed a joint statement by the two companies in which Rosneft expressed its support for the government's aim to give the state formal control over Gazprom and to liberalize the gas behemoth's share market.

However, the statement did not state explicitly that Rosneft endorses its planned merger with Gazprom, which would give the state control of the new energy giant.

The companies said there have been media reports "containing inaccuracies, distortions and misrepresentative information" about a conflict around the merger of the two companies. The companies are preparing to carry out the wishes of the owner -- i.e., the state -- the statement said.

"Both companies supported and support the decision of the government (which owns 100 percent of Rosneft and 38.37 percent of Gazprom) to increase the state's stake in Gazprom to a controlling stake and the consequent, mandatory liberalization of the Gazprom share market," the statement said.

Last September, President Vladimir Putin approved a plan to give the state formal control of Gazprom by merging it with Rosneft and then liberalizing the company's share market.

A host of contradictory statements by officials on the merger and Rosneft's murky acquisition of Yugansk have convinced analysts and investors that the tie-up is at the heart of a Kremlin power struggle.

Yugansk is now at the center of litigation brought by Yukos against Gazprom, Rosneft and two other companies for what it calls the expropriation of Yugansk.

Hearings as to whether a Houston court has jurisdiction over Yukos' bankruptcy filing will begin Wednesday. If Yukos wins the ruling, it could draw companies involved in the Yugansk sale into a lengthy fight in the U.S. court system.