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SUMMARY: Fridman Leaves TNK-BP, Setting The Stage For a New Maneuver
Interfax - 5.28.12 - JRL 2012-98

MOSCOW. May 28. (Interfax) - The position of TNK-BP (RTS: TNBP) CEO has been an unlucky one for the last five years - someone is constantly vacating it or unable to achieve it.

Oil Well File Photo
file photo
Mikhail Fridman - co-owner, board of directors member and concurrent CEO of the joint British-Russian oil company since 2011 - in keeping with the tradition of this position's high turnover, today announced that he is leaving his position at TNK-BP in a month.

This maneuver further aggravates the shareholder dispute between BP and the Russian Alfa-Access-Renova (AAR) consortium, which own TNK-BP on equal footing. Most likely, the goal of the maneuver - as with all disputes between BP and AAR - is to disrupt the parity ownership and to instigate the purchase and sale of the partner's stake or part of its stake.

UNSUCCESSFUL PREDECESSORS

Robert Dudley accomplished the first spell of bad luck in the post of TNK-BP CEO in 2008, prior to which the company was safely managed for five years. Dudley's dismissal was AAR's cherished dream, which came true and helped the consortium secure operating control over the company.

Later, AAR and BP struck an agreement to appoint an independent Russian-speaking manager as TNK-BP's CEO. After a long debate, the two sides decided on Maxim Barsky. However, having waited for this appointment for nearly three years and not sticking around for this decision, Barsky left TNK-BP at the end of 2011.

BP and AAR again reached an agreement - at BP's proposal, Fridman was appointed CEO until the end of 2013.

UNEXPECTED RESIGNATION

Fridman's decision to resign came as a surprise, since he has been the CEO for some time and gave no indication that he had plans to leave.

BP Russia's press officer Vladimir Buryanov told Interfax that BP and AAR will jointly look for a replacement as soon as possible. "This situation will not influence TNK-BP's operating activities, since Mikhail Fridman was not engaged in the company's daily management," he said.

AAR has not commented on Fridman's decision.

Meanwhile, a source close to AAR said that Fridman agreed to become CEO of TNK-BP at BP's request in 2011, when Barsky was not approved as the company's head. "Fridman agreed to it at the time, but now everything has changed. (... ...) TNK-BP has found itself in a situation of total corporate management collapse," the source said.

The source mentioned several factors as contributing to the "collapse." Because the board of directors is deprived of a quorum due to a lack of independent directors, it is inactive. Half a year was needed to appoint a BP-nominated independent director. Now the decision has been made to change head hunting firms, and it is not clear how long it will take BP and AAR to agree on a new agency and the conditions for cooperation with it, to discuss lists of candidates and to approve a new independent director.

In the absence of quorum within the board of directors, "the management is not entitled to make important decisions, shareholders are again in conflict, dividends are not being paid out, and the company is not developing," the source said.

BP noted that the company has done all it can to restore normal corporate management at TNK-BP and that it advocated holding a board of directors meeting in May.

BRITISH THREATS

Meanwhile, a source told Interfax that BP started sending letters to TNK-BP a couple of months ago saying that the management does not have the right to make decisions without shareholder approval, warning of possible legal actions.

These threats are unlikely to apply personally to Fridman as the company's CEO, because a BP lawsuit against him would signal a complete collapse of the BP-AAR partnership. However, these announced legal risks do regard the company's lower-level management and are an element of pressure from BP's side, the source said.

BP has also come forth with a proposal to AAR that the two companies make all decisions related to TNK-BP's activities together, as per their previous practice, until TNK-BP secures enough independent directors.

RUSSIAN RESPONSES

That would mean a return to the past from three years ago, when each of the partners had the right to veto any decision, resulting in never-ending disputes. Independent directors were called on to help AAR and BP come to an understanding, but unfortunately, they were unsuccessful. As a result, James Leng and Gerhard Schroeder, realizing the failure of their attempts to reach a consensus in the dispute, left the board, rendering it inactive.

In a way, Fridman's announcement has served as a stimulus for BP to discuss the current situation and adopt a fundamentally new solution with relation to TNK-BP. Most likely, TNK-BP's shareholders will restart active discussions on the possibility of buying and selling stakes or parts of stakes in the company to one another in the near future. It is highly likely that AAR will even more energetically show interest in acquiring the control it treasures from BP. Such a conclusion can be drawn from Fridman's actions.

The last time that the issue of buying and selling stakes in TNK-BP arose was when BP announced its strategic partnership with Rosneft (RTS: ROSN) in the Russian Arctic. AAR considered BP's plans to be in violation of its agreement with AAR on operations in Russia exclusively through TNK-BP. In order to save their cooperation, BP and Rosneft considered an option of buying AAR's stake in TNK-BP. However, none of these planned deals occurred.

Now Fridman has set the stage for a new maneuver.

Keywords: Russia, Oil, Gas, Energy - Russian News - Russia

MOSCOW. May 28. (Interfax) - The position of TNK-BP (RTS: TNBP) CEO has been an unlucky one for the last five years - someone is constantly vacating it or unable to achieve it.

Oil Well File Photo
file photo
Mikhail Fridman - co-owner, board of directors member and concurrent CEO of the joint British-Russian oil company since 2011 - in keeping with the tradition of this position's high turnover, today announced that he is leaving his position at TNK-BP in a month.

This maneuver further aggravates the shareholder dispute between BP and the Russian Alfa-Access-Renova (AAR) consortium, which own TNK-BP on equal footing. Most likely, the goal of the maneuver - as with all disputes between BP and AAR - is to disrupt the parity ownership and to instigate the purchase and sale of the partner's stake or part of its stake.

UNSUCCESSFUL PREDECESSORS

Robert Dudley accomplished the first spell of bad luck in the post of TNK-BP CEO in 2008, prior to which the company was safely managed for five years. Dudley's dismissal was AAR's cherished dream, which came true and helped the consortium secure operating control over the company.

Later, AAR and BP struck an agreement to appoint an independent Russian-speaking manager as TNK-BP's CEO. After a long debate, the two sides decided on Maxim Barsky. However, having waited for this appointment for nearly three years and not sticking around for this decision, Barsky left TNK-BP at the end of 2011.

BP and AAR again reached an agreement - at BP's proposal, Fridman was appointed CEO until the end of 2013.

UNEXPECTED RESIGNATION

Fridman's decision to resign came as a surprise, since he has been the CEO for some time and gave no indication that he had plans to leave.

BP Russia's press officer Vladimir Buryanov told Interfax that BP and AAR will jointly look for a replacement as soon as possible. "This situation will not influence TNK-BP's operating activities, since Mikhail Fridman was not engaged in the company's daily management," he said.

AAR has not commented on Fridman's decision.

Meanwhile, a source close to AAR said that Fridman agreed to become CEO of TNK-BP at BP's request in 2011, when Barsky was not approved as the company's head. "Fridman agreed to it at the time, but now everything has changed. (... ...) TNK-BP has found itself in a situation of total corporate management collapse," the source said.

The source mentioned several factors as contributing to the "collapse." Because the board of directors is deprived of a quorum due to a lack of independent directors, it is inactive. Half a year was needed to appoint a BP-nominated independent director. Now the decision has been made to change head hunting firms, and it is not clear how long it will take BP and AAR to agree on a new agency and the conditions for cooperation with it, to discuss lists of candidates and to approve a new independent director.

In the absence of quorum within the board of directors, "the management is not entitled to make important decisions, shareholders are again in conflict, dividends are not being paid out, and the company is not developing," the source said.

BP noted that the company has done all it can to restore normal corporate management at TNK-BP and that it advocated holding a board of directors meeting in May.

BRITISH THREATS

Meanwhile, a source told Interfax that BP started sending letters to TNK-BP a couple of months ago saying that the management does not have the right to make decisions without shareholder approval, warning of possible legal actions.

These threats are unlikely to apply personally to Fridman as the company's CEO, because a BP lawsuit against him would signal a complete collapse of the BP-AAR partnership. However, these announced legal risks do regard the company's lower-level management and are an element of pressure from BP's side, the source said.

BP has also come forth with a proposal to AAR that the two companies make all decisions related to TNK-BP's activities together, as per their previous practice, until TNK-BP secures enough independent directors.

RUSSIAN RESPONSES

That would mean a return to the past from three years ago, when each of the partners had the right to veto any decision, resulting in never-ending disputes. Independent directors were called on to help AAR and BP come to an understanding, but unfortunately, they were unsuccessful. As a result, James Leng and Gerhard Schroeder, realizing the failure of their attempts to reach a consensus in the dispute, left the board, rendering it inactive.

In a way, Fridman's announcement has served as a stimulus for BP to discuss the current situation and adopt a fundamentally new solution with relation to TNK-BP. Most likely, TNK-BP's shareholders will restart active discussions on the possibility of buying and selling stakes or parts of stakes in the company to one another in the near future. It is highly likely that AAR will even more energetically show interest in acquiring the control it treasures from BP. Such a conclusion can be drawn from Fridman's actions.

The last time that the issue of buying and selling stakes in TNK-BP arose was when BP announced its strategic partnership with Rosneft (RTS: ROSN) in the Russian Arctic. AAR considered BP's plans to be in violation of its agreement with AAR on operations in Russia exclusively through TNK-BP. In order to save their cooperation, BP and Rosneft considered an option of buying AAR's stake in TNK-BP. However, none of these planned deals occurred.

Now Fridman has set the stage for a new maneuver.


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