Kazakh Kazmunaygaz Says May Borrow to Fund Upstream Subsidiary Buyout



Reuters

ALMATY, April 21 (Reuters) - Kazakh state-owned oil producer Kazmunaygaz may raise new debt to finance the buyout of minority shareholders of its upstream subsidiary KMG EP in a deal worth about $1 billion, its managing director said on Thursday.

"We do not have our own funds for this (buyout). It's possible that there will be some short-term solution," Ardak Kassymbek told reporters.

Kazmunaygaz would then repay the debt using money from its subsidiary which can be transferred to the parent as dividend.

Kassymbek added the minority interest in KMG EP may cost about $1 billion at the current market price.

"In the current conditions Kazmunaygaz and the government, obviously, cannot offer a large premium," he said.

He did not say when a buyout could place.

Cash-strapped Kazmunaygaz has long sought to regain full control over its subsidiary which has a $3 billion cash pile, but the parent company's offer last November to carry out a share buyback using KMG EP's own money has not been implemented.

KMG EP has come under financial pressure from its parent and the government this year as its tax relief request was denied and the company had to switch to a less profitable scheme for domestic oil sales.

(Reporting by Olzhas Auyezov; Editing by Maria Kiselyova)



WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

RELATED COMPANIES