The Extraordinary Meeting of Shareholders of Bashneft held today by absentee voting made a decision on the reorganization of the Company through consolidation of CJSC Bashneft-Invest, which had been created through a spinoff from CJSC Sistema-Invest, with Bashneft. The Meeting of Shareholders established the procedure and set out the conditions for the consolidation and approved the Consolidation Agreement

In accordance with the Federal Law on Joint-Stock Companies, the Meeting of Shareholders decided to reduce Bashneft’s authorized share capital by cancelling 20.2% of Bashneft’s ordinary shares (16.8% of its authorized share capital) owned by CJSC Bashneft-Invest to be consolidated with the Company.

After this block of securities is cancelled, Bashneft’s authorized share capital will total 189,244,540 roubles (150,570,662 ordinary shares and 38,673,878 preferred shares with a par value of one rouble each). Due to the reduction in the authorized share capital the Meeting of Shareholders approved a new version of Bashneft’s Charter.

Under the legislation of the Russian Federation, shareholders of JSOC Bashneft who abstained or voted against the reorganization at the Extraordinary General Meeting of Shareholders on February 3, 2014 may request a buyback of all or some of the Company’s shares that they own. As has been reported earlier, on December 17, 2013, Bashneft’s Board of Directors set the buyback price for ordinary and preferred shares of JSOC Bashneft based on an independent appraisal made by LLC Stremleniye, the correctness of which was confirmed by Ernst & Young:

Shareholders of JSOC Bashneft who abstained or voted against the reorganization shall submit requests for share buyback before March 20, 2014, i.e. within 45 days after the Meeting of Shareholders made the decision on the reorganization.

The Company shall buy back the shares of the shareholders who have submitted the requests from March 21 through April 21, 2014, i.e. within 30 days after the end of submission of requests, based on the report on the results of submission of buyback requests approved by Bashneft’s Board of Directors.

In accordance with the decision of the Meeting of Shareholders, there will be an additional reduction in the authorized share capital of JSOC Bashneft as all preferred shares bought back from the shareholders who abstained or voted against the reorganization will be cancelled.

On December 18, 2013, JSOC Bashneft announced the start of a reorganization programme involving consolidation of CJSC Bashneft-Invest with Bashneft. CJSC Bashneft-Invest is Bashneft’s wholly owned subsidiary created through a spinoff from CJSC Sistema-Invest, whose shares were owned by OJSC JSFC Sistema and JSOC Bashneft (their stakes in its authorized share capital totalled 50.6% and 49.4% respectively). In its turn, prior to its split-up CJSC Sistema-Invest owned a 25.2% stake in the authorized share capital of Bashneft.

The reorganization of Bashneft approved by the Meeting of Shareholders on February 3, 2014 is aimed at eliminating cross-holdings in the Company and completing the divestment of its non-core businesses, which will make the structure of its share capital more transparent and will make the Company more attractive to investors.

The reorganization of JSOC Bashneft is expected to be completed by July 1, 2014, provided that necessary approvals are obtained from regulatory bodies.

Details on the reorganization of JSOC Bashneft are available on the website www.bashneft.ru in the Investors & Shareholders section.