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BP investors call for cash payout from Rosneft deal

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22/10/2012
BP's shareholders have called for a cash payout to be made if the sale of its 50% stake in TNK-BP goes through, as talk it is poised to offload its holding imminently picks up.

In a stock exchange announcement today, BP said it was in “advanced talks” with Russian state-owned oil producer Rosneft about the sale of its holding, but said no sale had yet been agreed.

TNK is Russia’s third largest oil producer, and a sale would give Rosneft full ownership of the firm and make it the world’s largest public oil company.

But according to Telegraph reports, shareholders in BP are concerned the company’s new structure will shave 85% off its current returns from Russia, and are demanding a cash pay-out in compensation.

If BP sells its stake to Rosneft, BP is expected to receive around 19.2% of Rosneft’s stock, valued at £13.5bn, together with a cash payment of between $11bn and $13bn.

However, shareholders are concerned the loss of BP’s dividend stream from TNK, which has so far proved lucrative, will have a severe impact on future pay-outs. BP’s investment in TNK has generated $19bn in dividends overall since it first bought into the company in 2003.

Some reassurance, however, has come from Rosneft’s promise to pay 25% of its earnings back to shareholders each year, arguing this guarantee will be legally binding and sanctioned by Russian president Vladimir Putin, the Telegraph reported. This part of the contract will be voted on by Rosneft shareholders on 30 November.

Roseneft paid a $2.7bn dividend in 2001, from net profits of $10.8bn. As a 19% shareholder, BP would have received a $540m pay-out.

BP’s share price sold off by 0.5% shortly after open on Monday, as shares fell to 448p.

The rising threat to BP’s dividend comes as Capita Dividends reported UK dividends had reached another record high in the third quarter of 2012.

UK dividends totalled £23.2bn for Q3, a record quarterly amount, with the figure prompting Capita to upgrade its full-year forecast from £78.3bn to £78.6bn.

The figure is a 15.6% rise on 2011’s figure, but Capita has warned dividends may suffer next year, adding it was paying close attention to the underlying slowdown seen in Q3.

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