OREANDA-NEWS. December 7, 2007. The consolidation of Sovcomflot and Novoship was completed. This follows the transfer of the Russian Government’s controlling 50.34 per cent shareholding (67.13 per cent voting shares) in Novoship to Sovcomflot. As a result, the enlarged Sovcomflot Group fleet comprises 124 vessels of 8.7 million tonnes deadweight (DWT), with the average age of tanker fleet being six years. In addition, there are 31 new vessels on order, representing 2.8 million tonnes deadweight. The Sovcomflot Group is now ranked №1 for Medium Range (MR) product carriers and №2 for Aframax tankers globally, and is one of the biggest ice-class tanker operators.

Igor Shuvalov, Chairman of the Board of Directors of both Sovcomflot and Novoship, said “The consolidation of the two state-controlled shipping assets strengthens Russia’s role as a leading supplier of energy to the world market by providing efficient, safe and reliable seaborne energy logistics. The Russian state will remain an active shareholder of the Sovcomflot Group for the foreseeable future. It will support the Group’s industrial business model based on well established direct relations with oil and gas majors, advanced shipping technologies and sustained long-term profitability. At the same time, the shareholder will support further institutional development of the Group, on the basis of best international corporate governance practice, to facilitate access to new sources of capital to finance future growth.”

Sergey Frank, Sovcomflot's President and CEO, said “This is a very important event for the Russian shipping industry, our customers and employees. Thanks to our shareholder’s support we have created a seaborne energy transportation group of global significance. We want to be recognised as a technologically advanced and innovative company, which creates long-term value for our shareholders, through open and close collaboration with customers, partners and other stakeholders. As a national leader, Sovcomflot will act as a catalyst for the development of Russian maritime clusters in Saint Petersburg, Novorossiysk, Murmansk, and the Russian Far East, while pursuing the highest social standards for its employees and seafarers.”

“Sovcomflot and Novoship have achieved much as separate companies over the past two-three years,” Mr Frank added. “By combining the best of both organisations, the Sovcomflot Group will have the expertise, technology, capacity and people to pursue more business opportunities in Russia and globally, and to take a leading role in servicing future Russian LNG and offshore projects.”

Sergey Terekhin, President of Novoship, said “Both Novoship and Sovcomflot are strong companies with compatible cultures and dedicated staff and represent an excellent strategic fit. Novoship will continue to develop its business for the benefit of its customers, shareholders, employees, the community and our country. The enlarged group will definitely be able to benefit from operational synergies and be better positioned to compete worldwide.”

The enlarged Sovcomflot Group’s consolidated accounts for the 2007 financial year, prepared under IFRS, will be presented in April 2008. In the meantime, both companies will continue trading as before, with existing commercial arrangements unaffected. Morgan Stanley acted as financial advisor and Liniya Prava provided legal counsel to Sovcomflot.