A publicly-listed Canadian company controlled by a tycoon Polish family is selling its majority stake in Ukraine’s third largest privately-owned natural gas company.
Citing “geopolitical events” and “unfortunate policy
decisions,” Calgary-based Serinus Energy is selling its 70-percent stake in Kharkiv-registered
Kub-Gas LLC for $30 million to an unnamed “private company,” according to a
company news release published on Dec. 23.
The main shareholder of Serinus is Luxembourg-registered Kulczyk
Investments, which was founded by the late Polish billionaire Jan Kulczyk who
died in July, with a nearly 51-percent stake.
Reasons stated for exiting the Ukrainian market included
high royalty rates on natural gas extraction, restrictive regulations on the
gas market and foreign currency controls that “effectively cut off access to approximately
70 percent of the company’s revenues,” read the news release.
This restriction impeded Serinus’ ability to redeploy
capital to its various energy projects in Tunisia and Romania.
“However, geopolitical events in the region over the past
two years and unfortunate policy decisions by the Ukrainian government have
seriously eroded the economic viability of our business there,” Serinus CEO Tim
Elliott said. “With appropriate fiscal conditions, we believe that the natural
gas business in Ukraine could return to growth, but with the great uncertainty
surrounding the country, we believe that our shareholders are better served by
exiting Ukraine…”
The announcement came a day before parliament reduced
royalty taxes to their previous levels as part of a legislative package to pass
next year’s budget. On Dec. 24, lawmakers voted to cut royalties to 29 percent
from 55 percent for extraction depths of up to five kilometers, and to 14
percent from 28 percent for deeper extractions.
About $56 million of company debt became current to the
European Bank of Reconstruction and Development in the last quarter of this
year, according to Empire State Capital Partners analyst Eugene Petrusha. The company
said it will repay $11 million of debt plus accrued interests to EBRD once the share
sale is concluded.
Serinus’ principal assets consist of four producing gas
fields, two service rigs and four gas processing facilities, all located in
government-controlled Luhansk and Kharkiv oblasts.
However, Toronto-listed Cub Energy Inc. has first rights to
buy the 70-percent stake in the Ukrainian gas producer. Owning 30 percent of
Kub-Gas, it has a contractual right called “rights of first refusal,” but the
expiration period isn’t publicly known.
Pelicourt Ltd., a private equity firm
owned by American citizen Robert Bensh, is Cub Energy’s main shareholder with
40 percent of shares. He couldn’t be reached for comment because of the
Christmas holiday.
Additionally, Serinus would only say
the future buyer has “no links between the company and its directors, managing
or supervisory persons and the buyer.”
In 2013, the company changed its name from Kulczyk Oil
Ventures to Serinus Energy. Kulczyk, who founded the company had an estimated
net worth of $3.9 billion when he died in July, according to Forbes magazine.
The announced deal implies the value of Cub’s share to be
nearly $13 million.
Kyiv Post editor Mark
Rachkevych can be reached at [email protected].
