BP and AAR move closer to finalizing TNK-BP
By OGJ editors
HOUSTON, July 15 -- BP PLC and the Alfa Group and Access-Renova (AAR) have signed a sale and purchase agreement, moving them closer to finalizing the completion of combining their Russian businesses into a new joint venture, TNK-BP.
BP will have a 50% stake as will its Russian partners (OGJ, Feb. 17, 2003, p. 35). The new company will incorpoate Tyumen Oil Co. (TNK) and Sidanco Oil Co. In addition, BP announced that its investment will total $6.15 billion instead of the $6.75 billion originally anticipated.
"On the basis of the progress made to date, I believe we can complete the transaction over the summer," said BP Chief Executive John Browne said. More than 70 members of the management team for the JV already have been appointed.
Closing adjustments reflect increased debt levels in TNK-BP, partly due to TNK's financing of the Slavneft acquisition (OGJ, Jan. 6, 2003, p. 31). BP now expects to pay $2.4 billion in cash for its equity interest in TNK-BP instead of $3 billion.
As announced in February, the deal still includes three subsequent payments of $1.25 billion/year in BP shares, valued at market prices before each annual payment.
Discussions continue between BP and AAR on whether the interest, which TNK has taken in the Russian company Slavneft, should be included in TNK-BP. Any such inclusion will result in additional consideration being paid to AAR.
The transaction, retroactive to Jan. 1, awaits approvals from regulatory authorities at the European Union, in Ukraine, and in Russia.