Sibir Energy to make decision on selling shares to Tatneft and Corus Holdings Ltd.

Sibir Energy plans to make a decision of making a deal on purchasing a block of shares in Sibir Energy by Transneft and Corus Holdings Ltd. within two weeks. An official of Sibir Energy said in an interview with RBC that in accordance with an agreement with an alliance consisting of Tatneft's subsidiary Teto Finance Ltd. and the Corus Holdings Ltd., reached in April 2002, the alliance was to buy out an additional issue of shares, totaling $240m, and to grant a $120m loan. As a result, it would hold 33.3% of the shares in Sibir Energy.

Sibir Energy needed that loan to return mortgaged shares in enterprises of the Central Fuel Company (the Moscow Oil Refinery and Mosnefteprodukt), without which it is impossible to form the authorized capital of the Moscow Oil and Gas Company. The founding of the Moscow Oil and Gas Company was initiated by the Moscow city government and Sibir Energy. Another idea of that project was that Tatneft would manage oil refining, and Corus would operate the sales network.

Nonetheless, Sibir Energy has made a decision to independently repay a $110m loan to Credit Suisse First Boston to 'recover' the mortgaged shares in the Moscow Oil Refinery and Mosnefteprodukt. According to the company's representative, it was done so as to avoid "pressure by the alliance (Tatneft and Corus) dealing with the management of Sibir Energy's operations." At the same time the cancellation of the second part of the deal (granting of a loan by the alliance) does not mean termination of contacts with it. The question of the form in which the alliance will provide funds for Sibir Energy is still open, but it can be resolved within the next two weeks during negotiations with representatives of the alliance. After an understanding is reached, an agreement between Sibir Energy and the alliance will be signed.


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