Monday, July 30, 2012

AAR Refuses Proposal of $1 Billion Payout To TNK- BP plc (ADR)(NYSE:BP

BP plc (ADR)(NYSE:BP)’s Russian Billionaire partners in TNK-BP have discarded the offer for Russian oil undertaking to contribute $1 billion in short-term dividends for 2012. This has added to the pressure on the UK oil group to do away with a bitter dispute over the company.

As mentioned by the Alfa-Access-Renova syndicate, it was attacking BP’s dividend proposal earlier this month owing to the instability in international oil markets and edgy corporate supremacy at the equal joint venture. 

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AAR and BP have been nearing a split ever since the UK based oil company had announced in June that it wanted to sell its 50 % shares in the company. The two shareholders have been involved in a legal dispute when BP had put forward the proposal last year to form a strategic enterprise with the Russian state oil group, Rosneft. AAR had felt that the tie-up violates its shareholder conditions with BP and had opposed it.
The legal suit has forced the respective directors to resign from the board. This has left the company without sufficient number of members for most of the business dealings. The leading shareholder in AAR, Mikhail Fridman, had left his post of chief executive in May.

The company is unable to generate quarterly dividend payments for the year 2012 as it does not have sufficient number of members. The provisional dividend would have required only the common decision taken by the remaining members of the board.

The UK based oil group has gained from $19 billion in payouts from TNK-BP since its inception in 2003. AAR has often argued that a record dividend payment by TNK-BP in the previous year has contributed to 90% of BP’s $4.1 billion. As AAR refuses to hold the dividend payment, BP may face a new hindrance just when it is preparing itself for presenting its second-quarter outcomes.

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The UK oil group company is yet to settle cash for the Gulf of Mexico deal. It is also likely to face a heavy charge over a minority shareholder claim over the Rosneft contract.

AAR’s refusal to support the dividend seems like an attempt to force BP to accept its terms. Ever since Rosneft has declared its consideration of bidding for BP’s 50% shares, AAR’s negotiating influence has seen a sharp decline. 

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