Mega-transaction on the privatization of the stake in Rosneft has burst

The Glencore and QIA consortium announced the termination of the agreement to sell the stake in Rosneft to the Chinese CEFC.
The consortium of the Swiss commodity trader Glencore and the Qatar sovereign fund QIA (QHG Oil) notified the Chinese CEFC about the termination of the agreement to sell a 14.16% stake in Rosneft. "The consortium today sent a notice to the CEFC about the termination of this agreement," Glencore said in a statement. Accordingly, the transaction will not be completed, the company said in a statement.

Glencore and QIA also decided to withdraw from the consortium, which was established in December 2016 specifically for the purchase of a 19.5% stake in Rosneft. With the dissolution of the consortium, Glencore and QIA will be directly owned by their shares in the Russian company - 0.57% will remain with Glencore and 18.93% in QIA. These shares are commensurate with the initial investment of companies in the share capital, the report says.

As part of the consortium's dissolution, a 14.16% stake in Rosneft will be transferred to a wholly owned subsidiary of QIA. Such an agreement was concluded today to settle the obligations assumed by the consortium. The agreement will enter into force on May 7.

The consortium QIA and Glencore in 2016 bought a 19.5% stake in Rosneft during the privatization deal, and in 2017 announced the sale of 14.16% of the shares in this stake in the Chinese CEFC. The deal was valued at $ 9.1 billion. As expected, after its closure, Glencore's share will be 0.5%, QIA - 4.7%.

But since the beginning of 2018, the CEFC has been in trouble. First, the law enforcement authorities questioned and put under house arrest the founder of the company E Jianmin, wrote the South China Morning Post. After that, CEFC was unable to close several deals both in China and abroad and began selling assets and assets worth about $ 3.8 billion, and Chinese courts froze part of the shares of CEFC subsidiaries, the newspaper reported.

CEFC was unable to fulfill the arrangements for the payment of the first tranche as part of a deal with Rosneft shares before early April. She had to pay sellers $ 1.8 billion, which is 20% of the share price. It was planned that another $ 7.3 billion Chinese company will transfer by the end of September 2018.

CEFC spent a total of about $ 400 million on the beginning of the deal. They will not be returned to this money, the source of Vedomosti knows about one of the parties to the deal.

The representative of Glencore can not yet answer the question, why the consortium will be dissolved. The representative of QIA did not answer Vedomosti's questions.

"Rosneft has nothing to do with changing the holding structure of the Glencore and QIA consortium, but supports the decision of its shareholders to transfer to direct ownership of the shares," the company representative said. "At the same time, we are confident that direct participation of QIA in the capital of the company will soon lead to new mutually beneficial bilateral and international projects with our Qatari partners," the Rosneft representative said.