TNK-BP Corporate Re-structuring
22 Jun 2004
TNK-BP announced today that it is developing a comprehensive corporate re-structuring plan, based around the creation of a New Russian Holding Company (NRH), which would become the principal profit center for TNK-BP. TNK-BP is considering restructuring to achieve the following objectives:
•Simplification of TNK-BP's corporate structure and more efficient management of the group. TNK-BP's current corporate structure, (the result of amalgamating the inherited corporate structures of TNK; Sidanco, ONACO and BP in Russia) includes approximately 600 companies both inside and outside the Russian Federation;
• Consolidation of minority shareholdings in TNK-BP subsidiary companies into NRH. This will enable those shareholders to share in the success of the company on an equitable basis.
•Greater transparency and improved corporate governance within TNK-BP. Under the proposals being developed NRH would be registered in Tyumen and would be the principal profit center for TNK-BP. The details of the proposed corporate structure are still being considered. To ensure equitable treatment for minority shareholders of existing TNK-BP group companies an independent appraisal is currently being undertaken in order to establish a fair basis for valuing minority interests. TNK-BP has also commenced a consultative process with a number of parties, including the Government of the Russian Federation, Regional Governments, and TNK-BP's lenders, whose consent for the restructuring is required before any steps to implement the project are taken. The company has also held a number of meetings with minority shareholders to obtain their views. Commenting on the consultative process, Kent Potter, Chief Financial Officer of TNK-BP said: "We believe consultations are very important to ensure that we hear the views of all interested parties. Clearly the views of our minority shareholders are material in this context so we have listened to, and remain ready to listen to, those shareholders who wish to share their views." TNK-BP has retained a number of independent consultants to assist in developing a comprehensive corporate re-structuring plan. It has engaged White & Case to provide legal advice; PriceWaterhouseCoopers to provide tax advice; and Deloitte to undertake the official valuation. DeGolyer and MacNaughton will assist in determining reserves and production estimates for the purposes of valuation. Robert Dudley, CEO of TNK-BP observed, "This project is an important priority for TNK-BP. It is large and complex and extends beyond simply addressing our minority issues. It must be done thoroughly and properly. Everyone's interests (including our minorities') are served by doing this to the highest possible standards. This may be labour intensive and time consuming in the short term, but we intend to do just that." TNK-BP intends to complete the planning and consultative processes in the coming months and to commence the restructuring process later in the year, following the required approvals. Source TNK-BP
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