“He jumped neatly”
On Thursday, Eurasia Drilling Company (EDC) for the second time this year announced the impending delisting. The company received an offer to buy shares from the group of major shareholders and top managers, according to the EDC disclosure on the website of the London stock exchange. The offer price of $10 per GDR, or $1,468 billion for the entire company. The names of potential buyers, EDC did not disclose. But at the end of 2014 more than half of the company belonged to its General Director Alexander Japaridze (31,06%) and the former President “Rosneft” Alexander Putilov (22,71%).
The proposal of the principal shareholders of EDC to minority shareholders of the company halved the January offer American Schlumberger. As a result of this transaction an American company for several years was to consolidate 100% of shares in EDC. The purchase was divided into several stages, first for the entire company was valued at $3.2 billion (or $22 per GDR). Almost nine months Schlumberger waited for permission to deal will give the Russian government Commission on foreign investment. Without it, September 30, the company announced that it refuses the deal. The state demanded that Schlumberger has kept him in “Golden share” in the company, the buyer did not agree, explained the other day the independent Director of the EDC, the President of the Russian Union of Industrialists and entrepreneurs Alexander Shokhin (however, FAS is denied).
The Schlumberger proposal was initially very attractive and above the market (81 percent — at the time of announcement), to be guided by him now incorrect, says Raiffeisenbank analyst Andrey Polishchuk, the new offer is closer to the current market quotes, which since January has fallen dramatically.
Schlumbeger “lucky” that the government has not approved the deal with the EDC, said last week, Shokhin: “the Deal in other conditions was graded — at $22, and now the price has dropped to $8-10. They are uncomfortable themselves to refuse. Jumped carefully.”
Who else buys back shares from the market
In September 2015, the largest Russian potash producer Uralkali announced a buyback of its shares until the end of 2015 to $2,26 billion the Company offered us $3.2 per share, or $16 per GDR and announced its readiness to acquire up to 24% of its shares. In this case, warned Uralkali, the volume of GDR traded on the London stock exchange may be less than 25% of the total number of shares of “Uralkali”, that exchange may result in delisting of the company. Uralkali has posted receipts on the stock exchange in 2007.
At the time of announcement of the repurchase program of shares of the largest shareholders of Uralkali were the main shareholders of the company — ONEKSIM of billionaire Michael Prokhorov (20%), URALCHEM Dmitry Mazepin and China’s Chengdong Investment Corporation (CIC, 12.5 per cent). The free float was 27,82% of the shares. CIC has already sold his stake Uralkali, informed the newspaper “Vedomosti” at the end of September.
September 30, the company said Kerimov (son of Suleiman Kerimov) Sacturino Ltd has proposed to minority shareholders of Polyus Gold to sell their shares at $2,97 per share. The whole company was valued at $9 billion, and the proportion not owned by Kerimov, at $5.4 billion (up 59.8% of the shares). The price of the offer underestimated, says an independent Committee of the Board of Directors of Polyus Gold. He was negotiating with Sacturino and the company Kerimov Junior’s Wandle Holdings Ltd about the increase in prices, but this has not happened.
On September 29, the Federal Antimonopoly service approved the application Sacturino on the consolidation of Polyus Gold. The transaction will be financed by a line of credit VTB on $5.5 billion reported by the company. Will be included under this credit facility shares, which the shareholders want to sell the offer, not been reported.
One of the major shareholders of Polyus Gold patterns are Gavriil Yushvaev (20%) and co-owner of group “Industrial Union of Donbass” Oleg Mkrtchyan (20%). The son of Suleiman Kerimov via Sacturino Ltd, and Wandle Holdings Ltd controls 40.2% of the shares of the company.
6 October 2015, Fitch Ratings placed under supervision in list Rating Watch “negative” ratings International and Polyus Gold OJSC “Polyus Gold”. So the rating Agency reacted to the news about the possible consolidation of 100% of the share capital of Polyus Gold International Ltd Sacturino companies and Wandle Holdings Ltd.
The management of EDC and principal shareholders of the company are confident that after the failure of the transaction with Schlumberger necessary “rationalization of the business,” says the company. About what there is a speech, a representative of EDC said. The company needs support in the current market conditions, according to the disclosure. There are also a list of key risks for EDC — the depreciation of the ruble, geopolitical issues, the reduction of investments by Russian oil companies in production in the fall in oil prices, changes to the tax regime for oil companies and uncertainty of the oilfield services market because of sanctions. According to major shareholders of the company, the best way for EDC — delisting, which will allow the company management to be “more flexible” in the decision.
Minority shareholders the news is not appreciated — after the publication of the disclosure about the offer paper EDC on the LSE fell by 8% (to $10,05 per GDR, or $1,475 billion for the entire company).
To evaluate the new offer, the EDC formed a Committee, which included independent Director of the company — Earl Clanwilliam, Shokhin and Director of the Russian Institute of Directors Igor Belikov. Their consultants are Renaissance Capital and Willkie Farr & Gallagher. He should prepare a recommendation to the Board of Directors, to accept or reject the proposal of the largest shareholders. Terms of consideration of the offer in the message EDC is not specified. A source close to one of the parties to the proposed transaction, said that the decision will be made “probably within a few weeks, certainly not months.” Later, the EDC released a separate message, which States that the Committee “has not yet formed” the relation to the offer.
The proposal for $1.7 billion
In January 2015 it became known that the world’s largest oilfield services company Schlumberger, represented in 85 countries, decided to buy a 45.6 percent stake in Eurasia Drilling company (54,5% owned by the head of the Board of Directors Alexander Djaparidze, 28,3% of the ex-head of “Rosneft” Alexander Putilov, and 11,1% — the former Vice-President of LUKOIL Serik Rahmetov). There was a possibility of increasing the share to 100% within three years. Initially it was assumed that the deal is worth $1.7 billion will be closed in the first quarter of 2015.
The deadline expired
However, the process stalled due to the fact that the Federal Antimonopoly service (FAS) asked the parties to the transaction additional materials, and then brought the issue to the consideration of the government Commission on foreign investment. On 30 September, the deadline for conclusion of the agreement between Eurasia Drilling and Schlumberger has expired, therefore, the parties abandoned their plans. Soon Schlumberger sent to the FAS’s request to terminate consideration of the petition for the transaction. Head of Department for control over foreign investments of FAS Armen Yang said that the request of the company approved, a submission is complete.
Where the money
EDC does not disclose what percentage belongs to the shareholders of the company submitting the proposal for the buyback of its shares. But we know that in the course of the transaction with Schlumberger from minority shareholders planned to buy 30,67% of the shares. For the redemption of such package Schlumberger was going to spend more than $990 million New buyers also are planning to gather at the market around 30%, says a source close to one of the parties to the transaction. If the offer is accepted, to repurchase the minority shareholders they would need about $450 million According to the interlocutor, the shares will be redeemed including the own funds of the EDC (at 30 June the company had $370,24 million in the account).
State Japaridze, according to Forbes magazine, is $1.5 billion, his partner Putilov, who became a shareholder of EDC in 2004 — $750 million But their main capital, according to the publication, — the shares of EDC, the spring fell by almost half.
Since the IPO in 2007, EDC paid out to shareholders in dividends a total of about $752 million, the Company was established on the basis of the drilling unit LUKOIL, which still remains the main customer of the contractor. By August 2015, it accounted for 55% of orders EDC. The total share of the company on the oilfield services market of Russia, according to its own data, is 21%.
Geophysicist Japaridze is engaged in oilfield services since 1990-ies, when he was called to work in the company MD Seis, a joint venture of the Central geophysical expedition (CGE) and the American oil services company PGI, wrote Forbes. The company has imported American seismic technology and has sold the information on mineral resources to Western companies. In 1990 during one of his trips to the USA Japaridze met with the then Deputy Minister of the oil and gas industry of the USSR, the future owner of LUKOIL Vagit Alekperov.
PGI after the bankruptcy of its Russian assets went to LUKOIL. New shareholders decided to transfer 15% of shares to the management team led by General Manager Japaridze. In 1995 on the basis of these same assets of LUKOIL and Japaridze created a JV with one of the largest exploration companies in the world by Western Geophysical (WG). The firm has received the name of “PetroAlliance”. Eight years later, the partners sold it to Schlumberger. Share Japaridze was estimated at $100 million.
And in a year Japaridze with partners for $130 million bought from LUKOIL’s oilfield services division “LUKOIL-Drilling”, which was converted to EDC. In 2007, the company completed an IPO in which the investors valued it at $3.4 billion
Getting rid of the minority shareholders now, Japaridze, probably, again will look for a partner, said Polishchuk. But shareholders may not agree to the terms of the offer — the price involves no premium to the market, he warns.
Figures Eurasia Drilling
$10 — the estimated repurchase price of one share of Eurasia Drilling Company Limited (EDC) of the minority shareholder. Major shareholders and top managers intend to make the company private
$1.6 billion — market capitalization EDC
$1.7 billion — the same amount offered Schlumberger for 46% of EDC in January 2015
10 conditions have developed intergovernmental Commission to buy shares of Schlumberger EDC
At 18.5 per cent decline in drilling EDC in January–August of 2015 compared to the same period in 2014
$320 million — at this level, the EDC plans to maintain capital expenditure
Up to 21% decreased the share of the Russian subsidiary EDC LLC “Eurasia Drilling company” in the market of production and exploration drilling in Russia
4.4 million km of oil and gas wells drilled in 2014, BK “Eurasia”
Sources: Interfax, RIA “Novosti”,