UPDATE 4-TNK-BP asked to join shareholder suit against BP

Tue Oct 18, 2011 5:23pm GMT
 

* Minorities seek damages over failed BP-Rosneft deal

* BP lawyer says no legal grounds for joining the lawsuit

* BP spokesman says its TNK-BP directors can block the move

By Vladimir Soldatkin and Douglas Busvine

MOSCOW, Oct 18 (Reuters) - Oil company BP's 50 percent-owned Russian affiliate TNK-BP is being asked to join one of its shareholders in a court battle seeking billions of dollars in compensation from its British parent.

BP expects to be able to block the request, which stems from a dispute over its failed attempt to work with an alternative partner in Russia, by using the four directors it has on the board, as decisions material to the company need approval from eight out of nine TNK-BP directors. Nevertheless, the move highlights AAR's pursuit of its own damages claim in the UK and the ongoing tensions between the partners.

BP and the quartet of billionaires who own the other half of Russia's third-largest oil producer clashed over BP's attempt to secure an exploration and share-swap deal with state-controlled Rosneft .

Through their Alfa-Access-Renova (AAR) consortium, the billionaires successfully blocked the Rosneft deal in May. Rosneft has since turned to U.S.-based Exxon as a replacement partner.

Now a minority shareholder in the listed subsidiary of 50-50 joint venture TNK-BP Ltd, TNK-BP Holding, is seeking damages of over $13 billion in a Russian court from BP and two nominees on the board of TNK-BP Holding, Peter Charow and Richard Sloan. TNK-BP Ltd controls 96.5 percent of TNK-BP Holding. The rest is in free float.

AAR, which declined formal comment, has said it has no connection with the suit brought by TNK-BP Holding shareholder Andrey Prokhorov.

But sources close to AAR, which represents the four tycoons Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, have said they are sympathetic to the suit.

Although the original BP-Rosneft deal was championed by Prime Minister Vladimir Putin, who has announced plans to return to the presidency next year, the government has refrained from intervening directly in the ensuing TNK-BP shareholder row.

"We have always emphasised that this is a corporate conflict. We have never taken sides ... although it's quite unpleasant for us that this conflict, this action, exists," Deputy Energy Minister Anatoly Yanovsky told reporters in Paris on Tuesday.

Prokhorov's request for support will be put to the board at an Oct. 24 meeting, a TNK-BP spokesman said on Tuesday.

TNK-BP Holding's board consists of four representatives each from BP and AAR, plus one independent director, David Lasfargue.

Sources said the AAR nominees would probably back the motion, but the position of Lasfargue, who declined to comment, was unclear. It was also not clear whether BP's nominees would attend the board meeting at all, potentially depriving it of a quorum.

AAR is meanwhile seeking a ruling by a UK-based arbitration tribunal that blocked the BP-Rosneft deal over whether BP is liable for damages to TNK-BP. Sources say a ruling may take a further six to nine months.

In Prokhorov's lawsuit, filed in the West Siberian town of Tyumen, TNK-BP's base, Prokhorov claims TNK-BP suffered damages because BP decided not to act via its existing Russian joint venture in the Rosneft deal, in violation of an exclusivity clause in the TNK-BP shareholder agreement.

There is another potential snag facing the Prokhorov case, which is due to be heard on Nov. 10-11.

Konstantin Lukoyanov, a lawyer for BP, said a Russian judge had refused Prokhorov more time to attract other investors to his case. He holds less than 1 percent and needs to get over the 1 percent threshold in order to legally file a lawsuit in such cases.

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