OREANDA-NEWS. Sistema JSFC (“Sistema” or the “Group”) (LSE: SSA), the largest publicly-traded diversified holding company in Russia and the CIS announces that the Group's Board of Directors (“Board”) has approved a restructuring plan for Sistema's subsidiary - Sistema Invest CJSC[1] (“Sistema Invest”).

The reorganisation proposes the separation of Sistema Invest's assets, with 20.2% of Bashneft's (“Bashneft” or the “Company”) issued ordinary shares[2] being transferred from Sistema Invest to Bashneft Invest - a newly formed 100% Bashneft owned subsidiary. Bashneft Invest will also receive Sistema Invest's payables due to Bashneft which amount to approximately RUB 36 billion.

Sistema Invest will retain 8.4% of Bashneft's charter capital, 21.5% of Ufaorgsintez' charter capital and 90.5% of Bashkirian Power Grid Company's charter capital, and will become a 100% owned subsidiary of Sistema.

Following the reorganisation, Bashneft intends to cancel the ordinary shares transferred to Bashneft Invest. This in turn is expected to result in Sistema owning 70.5%[3] of Bashneft's charter capital (prior to the results of Bashneft's mandatory tender offer).

The completion of the reorganisation is subject to all necessary corporate approvals from Bashneft and Sistema Invest.

Mikhail Shamolin, CEO and President commented:

“The elimination of the cross ownership structure is the last major milestone towards simplifying Bashneft's corporate structure. The announced plan improves the dividend flow to all Bashneft shareholders, it rationalises the Company's assets and creates a far more effective structure for Sistema's petrochemical and power grid companies.

This substantial value crystalisation will benefit all shareholders and make Bashneft one of the most transparent companies in Russia.”