Wednesday, January 4, 2017

Qatar and Glencore have created three British SP for the transaction of “Rosneft” – RBK

Photo: Reuters/Pixstream

the Swiss trader Glencore and the investment Fund of Qatar, QIA has established three joint venture with registration in the UK as part of the transaction for the purchase of 19.5% of Rosneft shares, follows from the data of UK corporate registry

December 5, 2016, a few days before the announcement of privatization of part of “Rosneft” in favour of a consortium of Glencore and the Qatari sovereign Fund, British agencies Glencore was founded in England by three companies in the form of a limited liability partnership (LLP) — Holding QHG, QHG QHG Investment and Trading. At the end of December in all three companies was registered by a new partner, Qatar Holding, a subsidiary of the Qatari Fund QIA.

LLP is a type of corporate structure in the UK, which is responsible for its obligations, but the liability of partners is limited by the size of their contributions (in a traditional partnership the participants are fully liable for the debts of the company). In a press release on 10 December (.pdf) Glencore reported that the transaction on purchase by a consortium of 19.5% of “Rosneft” provides “limited liability” in which financial risk Glencore is limited to the contribution of its own funds in the amount of €300 million Contribution QIA is €2.5 billion and the remaining €7.4 billion to buy shares of “Rosneft” is Bank financing, Glencore reported.

One of these three companies — QHG Trading — was referred to “Rosneft” reported on 7 December on the agenda of the meeting of the Board of Directors, which eventually approved the agreement on strategic cooperation with QIA and Glencore. The agenda of the meeting included the issue of transactions for the supply of oil and oil products with the company QHG Trading LLP.

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the company QHG Holding partners are Glencore Energy UK, Qatar Holding and registered in December in the Cayman Islands offshore, Cayman QHG, whose role in the transaction is not clear.

QHG Investment partners Qatar Holding and the aforementioned QHG Holding. Finally, QHG Trading trading partners are Glencore Energy UK and Qatar Holding. The consortium for strategic partnership with Rosneft Glencore and Qatar hold equal shares (50/50), reported earlier, Glencore and Rosneft.

the Press service of Glencore and representatives of the QIA did not respond to requests to RBC.

Why do we need three structures?

the Portfolio Manager GL Asset Management Sergey Vakhrameev believes that the consortium members could create British and offshore structures for tax optimization in the case that the contract for the purchase of securities of “Rosneft” possibility of redemption of this share of the “Rosneft” or its shareholder “Rosneftegaz” in the longer term. The resale of the shares in favor of this or another shareholder of such LLP structure is exempt from paying tax on capital gains, explains the expert. In addition, he believes that other transactions within the consortium, for example, trading operations with oil, also can be carried out through the British company.

QHG Holding could theoretically obtain possession of a package of 19.5% of Rosneft shares, QHG Trading — to trade oil and QHG Investment company that will engage in joint projects, carrying out in their investment, says Vakhrameev. Rosneft reported in a release on 10 December that the strategic cooperation agreement with Glencore and QIA provides for the development of projects in mining, logistics and trading business. The head of “Rosneft” Igor Sechin reported on 7 December President Vladimir Putin that the deal involves the creation of a special enterprise for production, together with a consortium as on the territory of Russia and abroad.

the Head of competition practice of legal company Sameta Andrey Astanin calls a common world practice to create the so-called “empty” companies according to the norms of British law, between which can be split by the consortium acquired the shares of “Rosneft”, and also hold financial assets. The lawyer believes that the establishment of such legal entities could be a requirement of one of the partners in the transaction, perhaps the Qatari Fund. In addition, the parties to the transaction could agree to resolve their disputes to British arbitration, which explains the jurisdiction of great Britain in the creation of such structures.

offshore company in the Cayman Islands, as the expert believes, could serve the purpose of optimization of taxation in various operations partners, including conducting trading operations of oil trading.

Finished calculations

Although Rosneft 7 December announced the sale of 19.5% of its shares to a consortium of Glencore and QIA and the company’s controlling shareholder Rosneftegaz has transferred money from the transaction to the budget (710,8 bn) in mid-December, Glencore has not confirmed the closing of the transaction until 3 January 2017, when the company published a short press release about “the conclusion of the final settlement and closing the transaction.” Questions to the deal remained after the Italian Bank Intesa Sanpaolo, called the main creditor of a consortium of 20 December stated that he had not agreed to Finance the deal.

January 3, the press Secretary of the Intesa announced that the Bank still provide €5.2 billion to a consortium for the purchase of shares in “Rosneft”. After that Intesa will negotiate with other banks to syndicate the loan. On the basis of General parameters of the deal, someone needs to Finance another €2.2 billion Glencore earlier said that the financing of the transaction, in addition to Intesa, will be attended by Russian banks, RBC wrote, citing sources, that the number of Russian participants of a pool of creditors there are Gazprombank (the Bank press service is not commenting); “Vedomosti” also called belonging to structures “Rosneft” the all-Russian regional development Bank (RRDB).

“Rosneftegaz”, which is a little more than 50% of shares of “Rosneft”, 4 January announced the “completion of all business, technical closing procedures and settlement”, specifying that these procedures required the training of more than 50 documents and agreements, involving “more than five” jurisdictions. In addition to Russia, the UK, Qatar, Italy, it could be Switzerland, where Glencore was and is based.

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