TNK-BP Holding Declines on Rosneft Borrowing Plan: Moscow Mover

OAO TNK-BP Holding fell the most on record in Moscow trading after new owner OAO Rosneft said it may borrow funds from the oil producer, raising concern it could scrap dividends.

The stock slumped 26 percent to close at 35.65 rubles, the biggest one-day decline since starting to trade on the Micex exchange in December 2010. Trading volumes were more than five times the three-month daily average.

The company is the traded unit of TNK-BP, which was bought by Moscow-based Rosneft last week. Its new parent approved a borrowing limit of about $10 billion from TNK-BP’s affiliated businesses, including about 114 billion rubles ($3.7 billion) from TNK-BP Holding and two of its units, a filing showed today.

“It looks to be the most egregious rip-off of minority shareholders I have witnessed since the end of the 90s,” Eric Kraus, head of Nikitsky Capital, said by e-mail. He doesn’t own or manage shares in either company.

Rosneft became the world’s largest oil producer by output when it closed its $55 billion acquisition of TNK-BP from BP Plc and a group of billionaires. So-called cash-pulling is a standard practice and allows the company to manage liquidity, a Rosneft official said today, asking not to be identified, citing corporate policy.

The loans may mean Rosneft is gaining access to TNK-BP Holding’s cash by means other than dividends, Alexei Kokin, an analyst at UralSib Financial Corp., said by e-mail. “It would be good to hear from Rosneft on TNK-BP Holding’s dividend policy, even if they want zero percent payouts,” he said.

Rosneft Chief Executive Officer Igor Sechin said last week that the state-run oil producer won’t buy shares held by minorities in TNK-BP Holding. He said last October that TNK-BP’s dividend policy may be terminated.

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