* Fridman seeks way out of shareholder impasse
* Oligarchs willing to sell stake to BP for cash, stock
* AAR see Russian govt support for sale to BP-source
* If BP wants to sell, AAR willing to buy 25 pct stake
By Douglas Busvine
MOSCOW, July 16 The billionaire co-owners of
Anglo-Russian oil venture TNK-BP would be willing to
sell their stake to British oil major BP Plc for cash and
stock to put an end to a bitter shareholder conflict.
That was the position presented by Mikhail Fridman, one of
the quartet of investors who own half of Russia's third-largest
oil company through the AAR consortium, to meetings in New York
and Boston with large institutions that own BP stock.
"The message Mikhail Fridman delivered was that the
partnership in its current form has run its course," AAR CEO
Stan Polovets said on Sunday of the meetings last week, which
followed up on a series of investor briefings in London in June.
"The shareholders need to find a way to realign ownership
interests and eliminate the internal contradictions that are
tearing TNK-BP apart."
No comment was immediately available from BP.
Shareholder relations at TNK-BP, which have often been rocky
since BP came in as an equal partner in 2003, broke down last
year when the British group tried to reach a strategic alliance
with state-controlled Russian oil major Rosneft.
AAR blocked the deal in the courts, successfully arguing
that it violated an exclusivity clause in the TNK-BP
shareholders' agreement. The ensuing fallout has left the
company without a board quorum, blocking dividend payments.
Fridman quit in May as CEO and BP put its stake up for sale at
the start of June.
EXPRESSION OF INTEREST
Under a timeline set by the shareholder pact, AAR has until
the end of this week to express its interest in buying BP's
stake. BP can negotiate with other interested parties but cannot
do a deal with them for a further 90 days.
AAR will submit an expression of interest on July 19,
Polovets said. It would be willing to buy one-half of BP's stake
in TNK-BP - or a 25 percent stake - at a current market price of
around $10 billion.
But AAR's preferred option would be to exchange its stake in
TNK-BP for cash and a stake of 10-12 percent in BP. "It would
make more sense for all parties involved," Polovets told
Such a deal would release BP from the obligations under the
TNK-BP shareholders' agreement barring it from partnering with
other companies in Russia, such as Rosneft and gas export
monopoly Gazprom, Polovets added.
At the same time, it would provide AAR with diversification,
liquidity and a long-term exit strategy.
"Our objective is to be shareholders in a global company. We
want to have liquidity and an exit strategy," Polovets said by
telephone from New York.
The reaction of the BP shareholders to the idea that the
British major buy out AAR from TNK-BP for cash and stock was
"much more positive" than for AAR's own proposal to buy 25
percent of TNK-BP.
"Most shareholders had no concerns about AAR being a
significant shareholder in BP," Polovets said, adding that AAR
would not seek board representation and would accept a lockup
agreement to avoid putting pressure on the stock.
In an ultimately futile attempt to unblock their strategic
deal, Rosneft and BP offered in May 2011 to buy out AAR's stake
for $32 billion through a joint venture under effective Rosneft
control. The deal collapsed at the last minute.
Sources familiar with Russian government thinking have said
that state energy holding Rosneftegaz, which controls Rosneft,
would be interested in principle in buying out TNK-BP's Russian
Talks between BP and AAR would, however, have to run the
course set out in the shareholder pact before any deal involving
Rosneft could emerge. With talks between BP and AAR yet to
begin, that prospect may be a way off, one senior source said.
The "binary" nature of the TNK-BP ownership situation is
negative for minority owners of its listed unit, TNK-BP Holding
, said Renaissance Capital energy analyst Ildar
"While there are numerous permutations for a final solution
at TNK-BP, we see only two possible outcomes: either one of the
partners buys out the other side or a state player replaces one
of the partners," Davletshin said in a research note to clients.
Sources close to the Russian consortium say AAR has received
informal indications from the Russian government that it would
support a deal that hands outright control of TNK-BP to BP.
"AAR would not propose such a transaction if it were not
confident of government support for a transaction through which
BP would gain 100 percent control of TNK-BP," the source said.
Polovets indicated that AAR was not proposing that a share
swap take place immediately.
"Such a deal could be structured to take effect over a
period of five to seven years, during which AAR would continue
to manage TNK-BP and help expand the company through
relationships with Rosneft and Gazprom," he added.
"In the meantime, the management of BP could focus on
stabilizing its operations elsewhere and grow its business
outside of Russia so that the Russian barrels don't represent
such a high percentage of BP's reserves and production."
At the same time, AAR has reiterated its readiness to buy
half of BP's stake in TNK-BP, should BP be determined to divest.
"We are confident that BP will not receive any serious
offers for its stake in TNK-BP; we are the only serious buyers,"
Polovets said, noting that BP had not asked AAR for permission
to provide confidential data on TNK-BP to a prospective buyer in
the six weeks since BP announced that it received an indication
of interest from potential buyers.
Although AAR has not yet sought financing for its potential
buyout of BP's 25 percent stake in TNK-BP, Polovets said the
group had received unsolicited offers for financing of a
possible deal from several major banks.
"We are holding off on the financing conversation. We want
to get a deal with BP first," Polovets said.