* Rosneft not "a charity fund" - CEO Sechin
* Committee formed to liaise with minorities
By Katya Golubkova and Vladimir Soldatkin
MOSCOW, June 6 Rosneft will not pay a
dividend for 2012 to minority shareholders in TNK-BP,
the oil company it bought earlier this year, in another blow to
investor confidence in Russia.
Minority shareholders own around 5 percent of TNK-BP Holding
which was acquired by Rosneft along with its parent TNK-BP in a
$55 billion deal to create the world's largest publicly traded
oil company by output.
The minority shareholders had received generous dividends
under TNK-BP's previous owners - BP and a consortium of
Soviet-born billionaires. Portfolio investors were attracted to
the company's small free float by a double-digit dividend yield.
But Rosneft said on Thursday its dividend policy could only
be extended to TNK-BP from the closing of the acquisition, which
was on March 21.
Rosneft CEO Igor Sechin, a close ally of President Vladimir
Putin, has said that Rosneft is not "a charity fund", has no
obligation to TNK-BP Holding's minorities and would not offer to
buy them out.
The harsh treatment of minority shareholders has damaged
investors' confidence in the Russian stock market, which trades
at a valuation discount of around half to other emerging markets
in part due to weak corporate governance.
"Of course it's not a good decision - shareholders were
expecting profits to be paid. It's a very bad sign for the
Russian investment climate," one minority shareholder told
It has also raised concerns about the position of BP, the
British oil major, which sold its one-half stake in TNK-BP in a
cash and stock deal that left it holding a stake of nearly 20
percent in Rosneft.
TNK-BP Holding's shares, down by over 30 percent since the
start of the year, fell by as much as 8 percent before
recovering to trade 2.4 percent lower in a flat overall market
FORMER CASH COW
But in a sign that minorities, which include Franklin
Templeton's emerging markets group, could get payouts in future,
Rosneft also said it planned to create a special committee to
work with them.
"Rosneft decisions relating to TNK-BP Holding dividend
policy will be announced after the issue is considered by the
TNK-BP Holding minority shareholders committee that is being
established," it said.
The committee, to be chaired by vice-presidents Svyatoslav
Slavinskiy and Igor Maydannik, will discuss the issue after
TNK-BP Holding's annual general meeting on June 27.
Based on TNK-BP Holding's current market capitalisation of
$19.8 billion, buying out minorities would cost Rosneft around
Investors would be happy to be bought out but also to be
paid a dividend.
"It would be a good outcome and also a good thing for Russia
- it's not a big deal for Rosneft," one portfolio manager at a
large foreign fund said, referring to a buyout. "But, if we are
paid 25 percent of Rosneft's profit in dividends, we would be
Last month, Rosneft's board proposed paying 25 percent of
its net profit under international standards in 2012 dividends,
or 85.3 billion roubles ($2.7 billion) in total - in line with a
minimum payout ratio required for state firms.
But instead of returning cash accumulated by TNK-BP during
last year's takeover talks through a dividend, Rosneft opted to
borrow $9.7 billion for five years in the form of inter-company
loans, leaving TNK-BP minorities empty-handed.