Friday, October 22, 2010

Novorossiysk Commercial Sea Port called Board of Directors Meeting to Consider PTP Acquisition

PJSC Novorossiysk Commercial Sea Port (NCSP) has called a meeting of its board of directors in order to consider convening an extraordinary meeting of shareholders to approve the terms of the proposed acquisition by NCSP of 100% of the participatory interests in Primorsk Trade Port LLC from Omirico Limited, which is the only shareholder of PTP (the “Primorsk Acquisition”). Omirico, a company incorporated under the laws of the Republic of Cyprus, is jointly controlled by JSC Transneft and by companies owned or controlled by Russian businessman Mr. Ziyavudin Magomedov.

The board of directors of NCSP is also to consider bank debt financing which it proposes to obtain in order to fund a portion of the purchase price payable for the Primorsk acquisition. Each of the Primorsk acquisition and the bank financing is mutually conditional on the other. It is a condition to the Transaction that Kadina Limited will sell to Omirico 100% of the issued shares of Novoport Holding Ltd., which holds 50.1% of the shares of NCSP. Both Kadina Limited and Novoport Holding Ltd. are incorporated in the British Virgin Islands and controlled by the current controlling beneficial shareholders of NCSP. If completed, the transaction would provide for the change of control of NCSP.

The board of directors of NCSP will also make a formal determination of the cash amount of the purchase price for the Primorsk Acquisition. The purchase price for the Primorsk Acquisition to be considered by NCSP's Board of Directors has been set by the independent appraiser at US$2.153 billion, assuming net debt of PTP of not greater than RUR 10.94 billion.

The Primorsk Acquisition (PTP) is an operator at the Port of Primorsk located on the Baltic Sea to the northwest of St. Petersburg. It is Russia's largest oil port, handling approximately 30% of Russia's oil exports and approximately 37% of oil exported via Russian seaports. The acquisition of PTP will be a transformational transaction for NCSP and, once completed, it will allow NCSP to significantly increase the scale of its operations, diversify its geographic presence, reduce the volatility of cargo volumes and gain access to new transport routes.