Deal for Rosneft to buy Alrosa gas assets might not happen - paper
MOSCOW. Feb 4 (Interfax) - The deal for Rosneft to purchase gas assets from Russia's diamond monopoly Alrosa might not happen due to disagreements between the two companies on price, the newspaper Kommersant said on Tuesday, quoting market sources.
The newspaper reported that Rosneft considered the price of the deal, $1.38 billion, too high. "There is a different understanding of reserves. One of the wells is still empty," one of the sources said.
Another source said that reserves at the Beregovoye field had fallen 3%-5%, which "is standard in geological exploration and cannot be viewed as a significant factor that affects an asset's value."
Talks are ongoing. Alrosa is not commenting on the issue.
In September 2013, Alrosa entered into an agreement with Rosneft to sell its gas assets, specifically Geotransgaz and Urengoy Gas Company, as well as Irelyakhneft and Alrosa-Gas to the state oil major for $1.38 billion.
The closure of the deal is contingent on a number of conditions, including regulatory approval and final corporate procedures following due diligence of the assets, Alrosa said in the prospectus for an IPO last autumn. The agreement stipulated that if the sale of the gas assets was not closed by December 31, 2013 for reasons beyond Rosneft's control, the oil company would have the right to cancel the deal or extend the deadline for closure by three months.
Kommersant's source affirmed that Rosneft had the right to extend the deal to March 31, 2014.
Alrosa planned to use the funds it received from the sale to settle long-term debt of $1.39 billion that was to be paid by the end of December 2013. The company's total debt as of September 30, 2013 was $4.6 billion, $534 million of which Alrosa must repay in 2014.
