April 5, 2018 / 11:48 AM / a year ago

Exclusive: Russia's top bank opposes Gutseriyev oil merger that seeks to oust Glencore

MOSCOW (Reuters) - Russia’s top state lender Sberbank (SBER.MM) opposes a plan by billionaire Mikhail Gutseriyev to merge his oil assets into one firm and replace co-owner Glencore (GLEN.L) because of concerns about his energy companies’ heavy debts, sources told Reuters.

The logo of Russian oil company Russneft is seen on the facade of its headquarters in central Moscow, Russia April 4, 2018. REUTERS/Tatyana Makeyeva

Gutseriyev, who has built his oil wealth with the help of Glencore over the past 15 years, had to endure a painful debt restructuring that left his energy empire split into two parts.

The magnate now wants to merge the firms, Russneft and Neftisa - both of which are heavily indebted to VTB (VTBR.MM), Russia’s No.2 bank, and Sberbank.

It was not yet clear why such an integration would be needed, although one source said a larger, merged company would be able to borrow more.

As part of the plan, Gutseriyev wants Glencore’s 33 percent stake in Russneft to be bought out by a new investor, possibly from China, but the proposal has drawn criticism from Sberbank and not yet been discussed with Glencore, the sources said.

The Gutseriyev family owns 47 percent of Russneft.

“Gutseriyev is looking for another partner to replace it (Glencore), telling creditors that the Chinese will be there soon,” one of the sources familiar with the idea said.

The potential merger would be further complicated as stakes in Russneft and Neftisa are held as collateral by VTB and Sberbank under multi-billion-dollar loans.

“These two companies have different creditors so the merger is technically impossible,” the source said. The sources said there was no firm deal on the table.

Russneft produces around 7.5 million tonnes of oil per year, while Neftisa pumps 7 million tonnes.

Sberbank and VTB have also lent to other parts of Gutseriyev’s empire, in particular, real estate developer Inteko and M.Video (MVID.MM), Russia’s largest home electronics retailer, respectively.

A third source, who is familiar with Glencore’s position, said the merger idea had not been discussed with the trading company and was not yet “concrete or serious enough”.

In a statement on Thursday, Russneft said that the idea of a merger with Neftisa has been expressed many times before but “for now the idea remains an idea and there are no plans to actually implement it”.

“In regard to Glencore, it remains main partner in Russneft,” the company said.

Glencore did not immediately respond to a Reuters request for comment. Sberbank and VTB declined to comment.

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B&N Bank, formerly part of the Safmar holding company that groups Gutseriyev’s family assets, was taken over last year in a bailout by the Russian central bank, which said Safmar’s banking business had expanded too aggressively.

The central bank has held a minority stake in Russneft since the bailout. It is not clear whether and how that could affect the potential merger.

The central bank did not immediately reply to a Reuters request for comment. A spokeswoman for Gutseriyev’s oil assets declined to comment.

Reporting by Katya Golubkova and Tatiana Voronova; Additional reporting by Dmitry Zhdannikov and Vladimir Soldatkin; Editing by Dale Hudson and Jane Merriman

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