Tyumen to take over four production subsidiaries

Russian company Tyumen Oil Co. (TNK) plans to absorb its four oil production subsidiaries to make the company more attractive to international capital markets prior to an international bond offering in mid-2001.

The company also plans to merge with its refining and marketing subsidiaries, beginning next fall.

The directors of Samotlorneftegas, Nizhnevartovsk Oil Production, Tyumenneftegas and TNK-Nyagan voted Monday to approve reorganizations by exchanging stock with that of their parent. The subsidiaries account for most of TNK's value, said a statement.

The subsidiaries' shareholders will decide whether to approve the reorganizations in February, and TNK will have final approval in April.

Under the plan, the four companies' assets, liabilities, and licenses will be transferred to TNK by the third quarter of 2001.

The mergers will increase the transparency of Tyumen's ownership structure to debt and equity investors as well as to government regulators, said the company.

TNK has asked Russia's Federal Securities Markets Commission to review its plans and hired the US auditing firm Ernst & Young to determine the subsidiaries' valuations and the value of their shares.

Tyumen Oil Co. was established in 1995. It is owned by the Russian Alfa Group and the US-Russian Access Industries/Renova Group.

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