SSA.L Regulatory News (SSA)

1 Oct 2013 09:16

ACQUISITION OF BASHNEFT- SERVICES ASSETS

Moscow, Russia – October 1, 2013 – Sistema JSFC ("Sistema") (LSE: SSA), the largest publicly-traded diversified holding company in Russia and the CIS today announces that it has completed the acquisition of a 100% stake in LLC Bashneft-Services Assets (“BNSA” or “the Company”) from JSOC Bashneft (“Bashneft”) for a total cash consideration of RUB 4.1 billion. The value of the stake is based upon an independent appraisal.

BNSA is an oil services company focused on onshore drilling and work over operations, equipment servicing and manufacturing, transportation and construction. In 2012, the Company operated a fleet of 104 drilling rigs, 180 workover rigs and more than 5,000 transportation vehicles.

The Company primarily operates in Volga-Urals, Komi, Khanty Mansiysky and Nenetsky Autonomous regions. Its largest contractor is Bashneft with a total share of drilling amounting to 52% in 2012.

Sistema’s plans over the medium term include improving and optimising the Company’s costs and operations, establishing transparent and competitive bidding process, renovating and upgrading the Company’s asset base, as well as expanding its client base. BNSA development will be funded by the Company’s own cashflow, as well as external financing if required. It is anticipated that Bashneft will remain one of the Company’s largest contractors.

Mikhail Shamolin, President and CEO of Sistema commented:

“Sistema’s acquisition of Bashneft oilfield services provides an attractive entry into the world’s second largest oilfield services market. The sector has expanded rapidly in recent years supported by Russia’s growing oil production from new and mature fields. These fundamentals, combined with Bashneft’s desire to focus on its core business of upstream and downstream production, provide Sistema with a unique opportunity to unlock BNSA’s full value potential. With a clear development plan, substantial existing sector expertise and possible future partnership opportunities we believe we can transform this Company to one of the leading oil services providers in Russia.”

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For further information, please visit www.sistema.com or contact:

Sistema is the largest publicly-traded diversified holding company in Russia and the CIS, which invests in and is a major shareholder of companies serving over 100 million customers in the sectors of telecommunications, high technology, oil and energy, radars and aerospace, banking, retail, mass-media, tourism and healthcare services. Founded in 1993, the Company reported revenues of US$ 8.5 billion for the second quarter of 2013, and total assets of US$ 44.4 billion as at June 30, 2013. Sistema’s global depository receipts are listed under the symbol “SSA” on the London Stock Exchange. Sistema’s ordinary shares are listed under the symbol “AFKS” on the MICEX-RTS Stock Exchange. Sistema was ranked number 315 in the 2011 edition of the Fortune Global 500 list. Website: www.sistema.com

The Company is not an investment company, and is not and will not be registered as such, under the U.S. Investment Company Act of 1940.

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Sistema. You can identify forward looking statements by terms such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “will,” “could,” “may” or “might” the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. In addition, there is no assurance that the new contracts entered into by our subsidiaries referenced above will be completed on the terms contained therein or at all. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to Sistema and its operations.

Copyright Business Wire 2013