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. Last Updated: 07/27/2016

Prana, Tomskneft Deals Both Priced at $3.4Bln

ReutersYukos' former headquarters is among the assets Rosneft bought from Prana.
Rosneft paid $3.4 billion to acquire Yukos headquarters and a trading company thought to be sitting on billions of dollars in cash from mystery firm Prana last week, according to a Rosneft document released Friday.

The sum was equal to the amount it received from Vneshekonombank for selling the state lender a 50 percent stake in Tomskneft, a Yukos production unit it bought in a bankruptcy auction in May.

Rosneft refused to disclose the price of the transactions when it announced the surprise moves last week, but the sums were revealed in a prospectus for an upcoming bond issue.

The state-controlled company plans to issue a $5 billion eurobond this month as it begins to pay off its $25 billion debt.

Rosneft snapped up the lion's share of Yukos' assets, which were sold off in a series of bankruptcy auctions this year at prices analysts said were well below market value. Its acquisition of Tomskneft and production unit Samaraneftegaz made it the country's largest oil producer.

Rosneft paid $6.8 billion for Tomskneft, two refineries and other assets at a May 3 auction, beating out another mystery firm, Unitex, to win the oil production unit, which currently pumps around 230,000 barrels per day.

"Rosneft has struck a pretty good deal," said Steven Dashevsky, head of research at Aton brokerage.

Bidding for the lot ultimately won by Prana, which included Yukos headquarters and a trading firm that former Yukos managers say holds up to $3 billion in cash, was the most competitive of this year's bankruptcy auctions.

Rosneft battled Prana, a firm never before heard of by market players, for over three hours in its bid to win the lot, folding after the starting price had quadrupled to $3.9 billion.

Media speculation had linked Prana to Gazprom and its affiliates. Rosneft CEO Sergei Bogdanchikov said last month that he was in talks to buy assets from the unknown firm.

Dashevsky said he believed Gazprom was likely behind the two transactions.

"Gazprom has always expressed interest in east Siberian oil fields, and it was probably one of only a handful of companies with the financial resources that could have bid $4 billion" at the Yukos auction, he said.

"It looks like these transactions are related," he said, noting they happened on the same day.

Rosneft took a loan of $22 billion from a consortium of Western banks to fund its purchases of Yukos assets, which totalled $20.8 billion.

At Rosneft's first shareholder meeting since its initial public offering last July, Bogdanchikov said last week that the company would sell bonds and noncore assets to trim $10 billion from its $25 billion in debts by 2010.

Rosneft began its climb through the acquisition of Baikal Finance Group in December 2004. Baikal Finance Group was the unknown firm that scooped up Yukos' main production unit, Yuganskneftegaz, without any significant competition, for $9.35 billion.

"This is what Yukos did itself in 2000," said Chris Weafer, chief strategist at Alfa Bank. "The lesson of Yukos is investors may not like what you're doing, but once it's over and you adopt best practice they quickly forget."

Yukos rose to become the country's No. 1 oil producer amid accusations of shady dealings by founder Mikhail Khodorkovsky.

By the time he was jailed, on charges of fraud and tax evasion, the company was touting itself as the most transparent of Russian companies and was close to selling a minority stake to a U.S. oil major.

Khodorkovsky has accused Igor Sechin, the deputy head of the presidential administration and the chairman of Rosneft's board, of orchestrating the legal onslaught against him and his company.

n Yukos wells and equipment at the Priobskoye field, where state-run Rosneft now pumps crude, will be offered at a bankruptcy auction Aug. 8, along with transport units that failed to sell a month ago, Bloomberg reported.

Yukos' bankruptcy manager is offering the assets at a starting price of 18.5 billion rubles ($720 million), the Federal Property Fund said Saturday in a notice published in the official Rossiiskaya Gazeta newspaper. That is nearly 10 billion rubles more than the original starting price for the transportation units.

"The wells have value," Nikolai Lashkevich, spokesman for Yukos' bankruptcy manager, said by telephone Saturday.

Other items, such as trademarks, computers and furniture, will be offered as part of the Aug. 8 lot. The planned June 7 auction for the transportation units failed because of a lack of bidders.

The state will get approximately 500 billion rubles ($19.45 billion) from asset sales of bankrupt oil firm Yukos, Interfax said Friday, citing Deputy Finance Minister Tatyana Golikova.

The money will go into the federal budget in August or September, Golikova said, Interfax reported. The report did not say where Golikova was speaking.