Board of Directors addresses pronciples of Gazprom and SIBUR's interrelationships
The Board of Directors’ meeting has come to an end at Gazprom’s Headquarters.
The Board approved the SIBUR’s development strategy for 2004 to 2011, with said company’s debt to Gazprom and its subsidiaries to be settled through the shares of a newly founded open joint-stock company.
The Board decided that Gazprom and SIBUR’s interrelationships would mainly hinge on the market business principles with the view of enhancing the efficiency of Gazprom’s investments into the petrochemical business and increasing the newly incorporated joint-stock company’s share capital.
The Board tasked the Management Committee with working through the deal on Gazprom’s acquisition of a 100% stake in the joint-stock company being set up and with submitting it for the Board’s endorsement in the 3rd quarter of 2005.
The meeting also dealt with matters on the approval of transactions, which fall under the Board’s competence.
Emerging under a directive of Gazprom’s Board of Directors, the SIBUR’s development strategy includes the product and market strategy in the feedstock, petrochemistry and tire business as well as the comprehensive and production strategies. The latter strategy is largely focused on the implementation of an investment program targeted at SIBUR’s business modernization and optimization.
The development strategy highlights the principles of interaction between Gazprom and SIBUR, taking into account the latter company’s financial standing and available capacities and options for its debt servicing and investment program financing.
As of the start of 2004, SIBUR’s total indebtedness with interest accrued accounted for RUR 67.86 bln. The conducted analysis shows that the most efficient and least risky way of restructuring SIBUR’s debt is incorporating a new publicly-held joint-stock company. Capitalizing (within a one-time transaction) part of SIBUR’s debt (RUR 40.1 bln) into shares of the new company will pursue the objective of promoting the company’s petrochemical business and minimizing the risk of managing and losing its assets.
To be a 100% subsidiary of Gazprom, the new business is planned to take over all liquid assets of SIBUR, to be formally exempt from SIBUR’s liabilities, to have a positive credit history and to be able to operate without Gazprom’s financial resources. At the same time, the old SIBUR company will continue its activities as financial operator, supplying feedstock to and processing it at the new firm’s facilities as well as marketing said output until fulfils its commitments to creditors.
The new company will be taking over the old SIBUR’s business on a gradual basis. Capitalizing SIBUR’s debt and founding on its platform the new business will make it highly possible to promote a vertically integrated structure capable to hold a dominating position in the Russian petrochemical industry.
Practically wholly-owned by Gazprom, SIBUR is the largest Russian producer of petrochemical output, including robbers, tires, polymers and liquefied gases. The company’s share in the Russian production of synthetic robbers, tires, liquefied hydrocarbon gases and polyethylene accounts for some 47%, 48%, 23% and 25%, respectively. In addition, SIBUR produces various types of plastics, high-octane gasoline components and many other products required to manufacture and operate automobile and agricultural vehicles, building machinery, planes, spacecrafts, packing and finishing materials.
Information Directorate, OAO Gazprom