Glencore notes the announcement released by the Russian government regarding the privatization of shares in Rosneft.
Glencore confirms that it is in final-stage negotiations regarding a transaction involving the acquisition, as part of a consortium with the Qatar Investment Authority (the Consortium), of a 19.5% interest in the issued share capital of Rosneft for €10.2 billion (the Shares).
Under the proposed arrangements, Glencore would commit €300 million in equity (the Glencore Equity) with the balance of the consideration for the acquisition of the Shares to be provided by QIA and by non-recourse bank financing.
The other material terms of the proposed transaction for Glencore are:
New 5 year offtake agreement with Rosneft representing a sizeable additional 220,000 bbls/day for the Glencore Marketing business.
Additional opportunities, through a strategic partnership for further cooperation, including infrastructure, logistics and global trading.
Other than the economic exposure represented by the Glencore Equity, (amounting to a c.0.54% indirect equity interest in Rosneft), Glencore would not have any economic exposure to its interests in the Shares.
Limited liability structure fully ring-fenced and non-recourse to Glencore apart from its €300 million equity contribution and the provision of certain guarantees, the risks of which would be fully indemnified by appropriate financial institutions.
Once the transaction is entered into, it will be conditional on the subsequent finalisation of all relevant financing, guarantee and other agreements and would be expected to close in mid-December.
A further announcement will be made in due course.