«1 The Boards of Directors of Lambros Overseas S.A. corporate registration no. 1019400, and OJSC Alliance Group, corporate registration no. ...»
On 22 May 2013, the Annual General Meeting authorized the Board of Directors of AOC to issue a maximum of 15 million Shares. The authorization further covers a right for the Board of Directors to resolve on cash issues, non-cash issues as well as set-off issues, including a right to deviate from the shareholders’ preferential right. In June 2013, AOC issued 2.28 million Preference Shares based on the authorisation.
Incentive Programmes Global Share Option Plan At AOC’s general shareholders’ meeting held on 14 November 2000, it was resolved to adopt a Global Share Option Plan (the ‘‘Option Plan’’). An amended Option Plan was adopted on 31 58 January 2006. The Option Plan allows for managers and directors of AOC and its consolidated subsidiaries and affiliates (eligible employees) to be granted call options each entitling the holder to acquire one ordinary Share in AOC. As of 30 June 2013, the total number of the outstanding options amounted to 2,298,851. Exercise prices range from SEK 55 to SEK 115. Participants in AOC’s Global Share Option Plan will be contacted regarding the effect of the Amalgamation on their rights under AOC’s Global Share Option Plan.
AOC has historically reinvested cash flows from operations through its capital expenditure programme aimed at increasing oil reserves and production and upgrading the Khabarovsk Refinery. AOC has not paid any dividends to holders of Ordinary Shares since it was listed in
2000. Holders of Preference Shares are entitled to an annual dividend of SEK 30 per Preference Share and have priority over dividends on Ordinary Shares. Such annual dividend shall be paid quarterly in an amount of SEK 7.50.
Eric Forss (1965) Chairman of the Board Board member: Since July 2004 Other assignments: Chief executive officer of Forssgruppen and Forsinvest, Chairman of the Board of Directors of Mediagruppen Stockholm MGS AB, Member of the Board of Directors of Forcenergy AB, Forsinvest AB, Consortum Capital Investments AB and S.O.G. Energy AB Background: 1990-1998 Forcenergy AB Education: B.Sc. degree in Finance from Babson College, Wellesley, Massachusetts USA Holdings in AOC: 94,000 Ordinary Share SDRs, 3,700 Preference Share SDRs and 1,059,995 Ordinary Share options.
Arsen E Idrisov (1970)
Board member: Since May 2008 Other assignments: Vice president for corporate finance at OJSC Alliance Group, Member of the Board of Directors of OJSC Alliance Group and OJSC ”Alliance” Oil Company Background: 1993-1997 LIA OIL S.A. and Sidanco, Education: Major in international economic relations, Russian Economic Academy and Otto Beisheim School of Management/ WHU (Vallendar, Germany) Holdings in AOC: 147,730 Ordinary Share options.
Mr Idrisov holds 5 per. cent of the shares of OJSC “Alliance Group” with the fully owned subsidiaries CJSC “Alliance Capital” and Betino Investments Limited and 5 per cent. of Daumier Investments Ltd.
Raymond Liefooghe (1942) Board member: Since May 2008 Other assignments: Director at Diamond Capital Fund, Diamond Growth Fund, Diamond Fixed Income Ltd, Diamond Asia Ltd, Nutrimenta Finance & Investments Ltd, Sucafina S.A., Sucafina Ingredients S.A., Lia Oil and Metinvest International.
Background: 1974-1991 BNP, 1992-2002 United European Bank, 2002-2005 BNP Paribas, 2006OJSC ”Alliance” Oil Company Education: International Trade Institute, Paris Holdings in AOC: 40,000 Ordinary Share SDRs and 149,311 Ordinary Share options.
Fred Boling (1940)
Board member: Since July 2004 Other assignments: Director of Energi Insurance Co. and Harbor Fuel Oil Corporation Background: Sinclair Oil, Atlantic Richfield, BP Oil Corp., Gibbs Oil, and Astroline Oil Trading Corp., Security National Bank, Bank of New England and Pacific National Bank, Massachusetts Education: B.Sc. and M.Sc. degrees from the Georgia Institute of Technology Holdings in AOC: 80,000 Ordinary Share SDRs and 163,568 Ordinary Share options.
Fernando Martinez-Fresneda (1951) Board member: Since May 2009 Other assignments: Managing director of Repsol’s office and operations in the Russian Federation Background: 1981- various positions in the Repsol organization
Isa Bazhaev (1962) Board member: Since May 2009 Other assignments: Board member and Vice president for finance of Alliance-Prom Background: 1993-2002 Lia Oil SA, 2002-2005 OJSC Alliance Group, 2008-2009 OJSC ”Alliance” Oil Company Education: Degree in engineering and construction, Grozny Oil Institute Holdings in AOC: 120,155 Ordinary Share options.
Claes Levin (1942)
Board member: Since July 2004 Other assignments: Chairman of several companies including Bröderna Falk AB, SH Förvaltning AB and Variant Fastighets AB. and Member of the Board of Directors of First Baltic Property Ltd.
Background: 1971-1980 Skandinaviska Enskilda Banken AB, 1980-1983 Diligentia, 1983-1985 Reinhold Bygg AB, 1986-1998 Platzer Bygg Education: Law degree and a B.A. degree in economics, University of Lund Holdings in AOC: 50,718 SDRs and 128,641 Ordinary Share options.
Group Management Arsen E Idrisov (1970) Director and Managing Director Employed since November 2008 Holdings in AOC: 147,730 Ordinary Share options Yevgeny Vorobeichik (1958) Chief Operating Officer Employed since 1999 Holdings in AOC: 0 SDRs Alexander Sutyagin (1958) Executive Vice President Downstream Employed since 2003 Holding in AOC: 0 SDRs Angelika Adieva (1975) Chief Financial Officer Employed since 2008 Holdings in AOC: 0 SDRs Mugammir Galiullin (1958) Executive Vice- President Upstream Employed since 2013 Holdings in AOC: 0 SDRs Auditors Deloitte AB and ZAO Deloitte & Touche CIS Auditors in charge The auditors of AOC are, for the entire period covered by the historical financial statements, Deloitte AB with authorised public accountant Mr. Svante Forsberg (born 1952 and member of FAR) and ZAO Deloitte & Touche CIS with authorised public accountant Ms. Natalia Golovkina (member of Audit Chamber Russia) as auditors in charge.
Alliance Group values the skills, experience and industry knowledge of the existing management and employees of AOC. Alliance Group confirms that, upon completion of the Amalgamation, the existing contractual and statutory employment rights, including in relation to bonuses and pensions, of all AOC employees will continue to be fully safeguarded.
Financing The Transaction will be funded by a committed facility provided under a facility agreement between, among others, the Lender and Daumier Investments Limited as borrower (the “Borrower”) (the “Facility Agreement”).
Drawdown of the facility is conditional upon delivery of certain customary conditions precedent to funding, the majority of which are within the Borrower’s control, such as corporate approvals, delivery of financial statements and execution of security documents (which are in an agreed form). Certain other conditions precedent to funding allow the Lender some discretion, for example, provision of satisfactory legal opinions of the Lender’s counsel as well as evidence that all necessary and desirable authorisations and consents have been obtained in connection with the Transaction.
The representations, covenants and events of default contained in the Facility Agreement are customary for a facility of this nature. The facility is provided on a committed basis and the Lender will therefore be obliged to fund a loan if requested to do so (subject to delivery of the conditions precedent referred to in the previous paragraph) provided that no misrepresentation, breach of covenant or other event of default (actual or potential) exists at the time of the request or when the funds are due to be advanced. If such an event has occurred then the Borrower is required to notify the Lender thereof and the Lender has discretion to refuse a funding request in such circumstances.
Examples of representations contained in the Facility Agreement include those in relation to the status of the obligors under the Facility Agreement (the Borrower, Alford, Geltome Ltd. and Betino Investments Ltd.) and AOC and its subsidiaries, absence of insolvency, absence of material litigation and material breach of laws. Examples of covenants contained in the Facility Agreement include those which restrict the creation of security, disposals, the incurrence of financial indebtedness, a change of business and acquisitions. Examples of events of default contained in the Facility Agreement include cross-default over certain thresholds, insolvency, misrepresentation, expropriation, litigation and moratorium.
Irrevocable Undertakings from Shareholders
The Board of Directors of Repsol Exploracion S.A., one of the largest holders of SDRs, representing 3 per cent. of the total number of SDRs representing the Shares, corresponding to 3 per cent. of the total number of votes in AOC as of 30 September 2013, has approved to vote in favour of the Transaction at the SGM.
Furthermore, the Independent Directors have confirmed that they intend to undertake irrevocably to vote in favour of the Transaction at the SGM in respect of their own beneficial holdings of SDRs representing 264,718 of AOC’s Ordinary Shares (representing approximately 0.2 per cent. of the total number of votes in AOC as of 30 September 2013).
91Convertible Bonds Tender Offer and Consent Solicitation
On 4 November 2013 AOC is to launch a Convertible Bond Tender Offer and Consent Solicitation for its outstanding Convertible Bonds. Holders of the Convertible Bonds who participate in the Convertible Bond Tender Offer and Consent Solicitation by a specified early participation date will be offered, by AOC, 105 of par, plus accrued but unpaid interest, which represents a 2.3 per cent.
premium to the price of the Convertible Bonds as of 30 October 2013. Holders of the Convertible Bonds who participate in the Convertible Bond Tender Offer and Consent Solicitation after such early participation date will be offered, by AOC, 100 of par.
The Convertible Bond Tender Offer and Consent Solicitation is subject amongst other things to completion of the Amalgamation, at the discretion of the Independent Directors, and sufficient financing.
Alford is a newly created subsidiary of Alliance Group, incorporated in Bermuda for the purpose of the Amalgamation as an exempted company limited by shares (registration number 48233). Alford has never conducted, and at present does not conduct, any business. Its registered office is at Canon's Court, 22 Victoria Street, PO Box HM 1179, Hamilton HM EX, Bermuda.
Information on Alliance Group Alliance Group owns 100 per cent. of Alford, which is a company established for the purpose of consummating the Transaction.
OJSC Alliance Group is incorporated and existing under the laws of Russia as an open joint stock company, with its registered offices at 39 Sivtsev Vrazhek, Moscow 119002, Russia and is a private holding company with operations primarily in the CIS countries, in a range of sectors. It is owned by the Bazhaev family, which are long term shareholders with significant expertise in the oil and gas sector, mining and other industries, as well as crisis management experience. The various businesses of the Bazhaev family include mining (Russia’s second largest platinum and fifth largest gold producer), transport and logistics, real estate and development and mass media.
OJSC Alliance Group is further involved in a number of social projects, including Russian Federal programs and has been implementing best international standards and practices in corporate governance Lambros Overseas S.A. is incorporated and existing under the laws of the British Virgin Islands, with its first registered office at Wickhams Cay I Vanterpool Plaza 2nd floor, Road Town, Tortola, British Virgin Islands and is a private holding company which belong to the same beneficial owners as OJSC Alliance Group. Lambros Overseas S.A. through its subsidiaries is involved in oil products trading activity in Asian-Pacific and European markets, rendering transhipment services through owned or leased terminals in CIS countries and in Europe and retailing of oil products on Ukrainian market through owned depots. In 2007 Lambros Overseas S.A. and Shell Overseas Investments BV established a joint venture for retailing of automotive fuels.
93 Tax issues in Sweden 16 The following is a summary of certain Swedish tax issues that may arise from the Transaction. The summary is based on current Swedish tax legislation and is intended only as general information for Shareholders who are resident in Sweden for tax purposes, unless otherwise indicated. This description does not deal comprehensively with all tax consequences that may occur in this context. For instance, it does not cover cases where Shares are held by a partnership or held as current assets in a business operation. Also, it does not deal with the rules that in certain cases apply in the corporate sector with respect to tax exempt capital gains on “shares held for business purposes”. Special tax consequences that are not described below may also apply for certain categories of taxpayers, including investment companies and mutual funds. Each holder of Shares is recommended to consult a tax advisor for information with respect to the tax consequences that may arise from the Transaction, including the applicability and effect of foreign income tax rules, provisions in double taxation treaties and other rules that may be applicable.
General information Shareholders who dispose of their Shares as part of the Transaction will generally be subject to capital gains taxation.
The capital gain or capital loss is calculated as the difference between the sales proceeds, after deduction of sales expenses, and the Shares’ acquisition cost for tax purposes. The acquisition cost is calculated according to the “average method”. This means that the costs of acquiring all Shares of the same type and class are added together and calculated collectively, with respect to changes to the holding. Ordinary Shares are not deemed to be of the same type and class as Preference Shares.
Since the Shares are listed, the acquisition cost for the Shares may, as an alternative, be determined as 20 per cent. of the net sales revenue under the “standard rule”.