Lukoil wants to buy up to 25% of all shares belonging to nonresidents at a discount, will pay in currency from overseas accounts
MOSCOW. Aug 22 (Interfax) - Oil company Lukoil , whose shares have historically been popular with foreign investment funds, wants to buy up to 25% of its charter capital from non-residents whose shares are now effectively blocked in "C" accounts.
Like Magnit , another former darling of foreign investors, which has already bought out the shares of non-residents, Lukoil intends to make an offer at a significant discount to the current exchange price, and the company intends to use the funds already available on the group's foreign accounts to pay for the shares and not enter the Russian domestic foreign exchange market.
A source familiar with the situation told Interfax that in July Lukoil requested permission to buy shares from non-residents - according to presidential decree No. 520, this type of transaction requires a separate decision from the head of state - from the Russian authorities. Potential buyers are companies in the Lukoil Group, and the volume of the offer will not exceed 25% of the shares of the oil company - it is assumed that it will also apply to depositary receipts. The discount to the market value should be at least 50%.
Lukoil's charter capital consists of 692,865,762 shares, so the limit of the offer under discussion would be approximately 173 million shares. Based on the company's August 21 closing price on the Moscow Exchange of 6,265.5 rubles, the market price of this package is almost 1.1 trillion rubles. The amount of Lukoil's potential expenditure for the buyout, if it takes place, will depend on the exact size of the discount and the price it will be calculated from - for example, at the end of June, Lukoil shares on the MOEX traded below 5,000 rubles.
Another Interfax source confirmed that Lukoil had applied to the authorities. In its petition, Lukoil promised to use only the funds accumulated in the group's foreign accounts from overseas projects for the buyout. Lukoil said that this money is sufficient and the company will not enter the domestic foreign exchange market in order to finance the offer. In addition, the proposed conditions provide for the transfer of 10% of the total amount spent on the buyout to the Russian budget, the source said.
Payment to the budget is a standard requirement of the authorities for non-residents exiting Russian assets. Another general condition is the obligation to place in the future some of the repurchased shares on the stock market, if this is a public company. The source said Lukoil was prepared to commit within three years of the buyback to putting up to 20% of the acquired shares back into free float either by selling them on the market or using them for an employee incentive program.
Interfax's sources could not say whether any decision has been made on Lukoil's request. The Lukoil press office did not comment. The office of Deputy Prime Minister Alexander Novak, who oversees the fuel and energy complex, and the Energy Ministry were not immediately available for comment.