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December 18, 2013

Reorganization of JSOC Bashneft through the Merger of JSOC Bashneft and CJSC Bashneft-Invest

JSOC Bashneft announces the launch of a corporate reorganization through a merger with CJSC Bashneft-Invest, a 100% subsidiary established as a result of the spin-off from CJSC Sistema-Invest. CJSC Sistema-Invest is owned by OJFC Sistema (50.6%) and JSOC Bashneft (49.4%) respectively, and at present holds a 25.2% stake in Bashneft’s charter capital.

“The objective of the reorganization is to unwind Bashneft’s circular shareholder structure and to finalize the disposal of non-core assets, both of which will increase the transparency of the company’s ownership structure and its investment potential”, said Felix Evtushenkov, Chairman of the Board of Directors of Bashneft. “The aim of the reorganization is to significantly contribute to the future growth of Bashneft’s value and will be undertaken with thorough respect for the rights of all of the shareholders of Bashneft”.

Yesterday, as part of the reorganization, Bashneft’s Board of Directors decided to call an extraordinary general shareholders meeting on February 3, 2014 by absentee voting with the following agenda:

Reorganization of JSOC Bashneft through a merger with CJSC Bashneft-Invest, which is to be spun off from CJSC Sistema-Invest.

Decrease of JSOC Bashneft’s charter capital due to the Company’s reorganization.

Approval of the amended Articles of Association of JSOC Bashneft.

Decrease of JSOC Bashneft’s charter capital through the cancellation of Class A preferred shares to be bought back.

The list of shareholders entitled to participate in the extraordinary general shareholders meeting of Bashneft on February 3, 2014 will be prepared on the basis of the information in the shareholder register as of December 23, 2013.

The Board of Directors has also determined the prices at which, pursuant to Russian law, the ordinary and preferred shares of JSOC Bashneft shall be bought back at the request of the Company’s shareholders who do not vote or vote against the reorganization.

Type of share of JSOC Bashneft

Buyback price (ruble per share)





The buyback prices were determined as a result of the independent appraisal carried out by LLC Stremleniye. The appropriateness of the share valuation methodology used by the independent appraiser was confirmed by Ernst & Young.

Should the shareholders of CJSC Sistema-Invest approve the spin-off of CJSC Bashneft-Invest and its merger with JSOC Bashneft, Bashneft-Invest will as a result own 20.2% of ordinary shares of Bashneft (16.8% of share capital). CJSC Bashneft-Invest will also receive CJSC Sistema-Invest’s debt due to Bashneft in the amount of c. RUB36bn.

Pursuant to the Federal law “On Joint Stock Companies”, if the shares of the Company, which will be the surviving entity, are held by the subsumed company, the shares are required to be cancelled. Thus, if Bashneft’s shareholders approve the respective resolutions on February 3, 2014, the above-mentioned stake will be cancelled and the Company’s charter capital will decrease.

Pursuant to Russian law, any shareholder of JSOC Bashneft that does not vote or votes against the reorganization and wishes its shares to be bought by the Company, must send a request to the Company within 45 days from the date of the relevant extraordinary general shareholders meeting at which the reorganization was approved. The buyback shall be carried out no later than 30 days after the deadline for submitting buyback requests on the basis of the Report approved by Bashneft’s Board of Directors on the shares tendered for buyback.

Bashneft intends to cancel any preferred shares acquired as part of the buyback offer to shareholders. As a result, the charter capital of JSOC Bashneft will be decreased, subject to approval at the Company’s extraordinary general shareholders meeting on February 3, 2014.

Bashneft intends to complete the reorganization by July 1 2014, subject to receiving relevant shareholder and regulatory approval.




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