The TNK-BP Board of Directors extraordinary meeting was held today in Paris. The only item on the Board’s agenda was a vote on the TNK-BP management’s proposal for the Company to participate in the Arctic exploration project and a share swap and with Rosneft instead of BP.
Under the terms of the TNK-BP Shareholder Agreement, the proposal is a 'unanimous reserved matter'. In order for it to be approved by the Board, all of the AAR-nominated directors and all of the BP-nominated directors present at the Board meeting had to vote “in favor” of management’s proposal.
The proposal was not approved due to a negative vote of all of the BP-nominated directors. All of the AAR-nominated directors and the three independent directors voted in favor of the proposal.
"Needless to say, management is very disappointed with the outcome of the Board meeting,” said Mikhail Fridman, CEO of TNK-BP. “We saw participation in the Rosneft transaction as a very attractive opportunity for the Company, which promised to create significant value for both shareholders. We also believe that TNK-BP’s participation in a strategic alliance with Rosneft, involving a share swap and exploration of highly prospective acreage in the Arctic, would have been highly beneficial for Rosneft and for Russia. We regret that the BP-nominated directors declined to support management’s recommendation, which was supported by all the other directors, including the three independents."
Under the provisions of the TNK-BP shareholder agreement, the failure of the Board to support management's proposal means that TNK-BP cannot proceed with the Rosneft transaction. At the same time, the injunction preventing BP from implementing its strategic arrangements with Rosneft (including the share swap agreement, the Artic cooperation agreement and the framework agreement) remains in place.