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TNK Billionaires to Seek London Listing If BP Bid Fails

TNK Partners May Seek London IPO in Event BP Sells to Rosneft
AAR is challenging Rosneft, Russia’s biggest oil producer, for BP’s stake after years of tensions over strategy and management at TNK-BP. Photographer: Andrey Rudakov/Bloomberg

The billionaire partners in TNK-BP may seek a London listing for their 50 percent stake in Russia’s third-biggest oil producer should state-run OAO Rosneft trump them for BP Plc’s half.

AAR, the group that represents the billionaires, sent BP a notice of intention to sell, allowing for an initial public offering or sale to a third party, according to Chief Executive Officer Stan Polovets. The partners -- Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik -- have no intention of selling if their offer wins or BP holds onto its stake, he said in a phone interview.

AAR is challenging Rosneft, Russia’s biggest oil producer, for BP’s stake after years of tensions over strategy and management at TNK-BP. BP said June 1 it would pursue a sale of its stake, four days after Fridman submitted his resignation as CEO of the venture, saying the 50-50 relationship had soured.

“The prospect of sharing the asset with Rosneft is less than ideal for AAR,” Oleg Maximov, Alex Fak and Valery Nesterov, analysts at Sberbank Investment Research in Moscow, said in a note. “The latest report increases the chances that the status quo will prevail.”

The TNK partners will need the approval of Russia’s government to sell shares abroad, Energy Minister Alexander Novak said today in London. The ministry hasn’t received any official documents regarding a deal for TNK-BP, he said.

Polovets didn’t specify if AAR may sell all or part of its stake or any timing.

Deal Collapsed

The fractious relationship had eased after a 2008 battle over strategy and management that led to the ouster of now BP CEO Bob Dudley as head of TNK-BP.

Tensions flared again last year as BP sought to swap $7.8 billion of shares with Rosneft and form an Arctic exploration alliance. The deal collapsed after a legal challenge from its TNK partners, who said the deal violated a shareholder agreement. AAR rejected a $32 billion offer at the time for its stake from BP and Rosneft.

AAR’s notice may be a delay tactic and could trigger a second 135-day period of negotiation between BP and AAR, the Sberbank analysts said. After BP’s June 1 announcement, AAR had 45 days to decide on making a bid and 90 days in which the shareholders must negotiate in good faith, making a deal with an outside party more difficult. The period ends on Oct. 17, and talks may continue beyond then. BP is asking for formal bids from Rosneft and AAR by the end of that period, a person with knowledge of the matter said Sept. 25.

Bank Funding

As the deadline nears, the AAR partners “continue to work on an offer for BP’s shareholding in TNK-BP,” Polovets said in an e-mailed statement.

AAR is seeking to raise as much as $20 billion, in part to help fund a planned all-cash offer. Rosneft is looking for about $15 billion from banks, people with knowledge of the plan said last month. BP’s Dudley said in July that investors should be open to a combination of shares and cash.

The shares of OAO TNK-BP Holding, the listed unit that holds most of the venture’s Russian production and refining assets, fell 1.2 percent to 81.40 rubles in Moscow, heading for the lowest since Aug. 21 and cutting its value to $39 billion.

BP received the notice from AAR, Toby Odone, a company spokesman in London, said by e-mail.

“We can confirm that we are committed to continue the sales process for our 50 percent share in TNK-BP as we announced on June 1,” Odone said.

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