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Gold/Mining/Energy : Petrokazakhstan Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Madeleine Harrison who wrote (1654)	5/15/2001 4:33:11 PM
From: pz	Read Replies (1) \| Respond to of 2357

Hurricane Pays Dividend to Thwart Takeover By Ian Karleff TORONTO May 15 (Reuters) -Canada's Hurricane Hydrocarbons Ltd. (Toronto:HHLa.TO - news) proposed on Tuesday to pay a $200 million dividend to shareholders in the form of a debenture to try to thwart the efforts of a major shareholder to take control of the company and its Kazakhstan oil operations. ADVERTISEMENT Hurricane is under siege from its 30 percent shareholder, Central Asian Holdings Ltd. (CAIH), which is trying to raise its ownership of Hurricane to 53 percent with a hostile C$189 million ($121 million) bid launched in mid-April. The dividend prevents Central Asian from raising its ownership of Hurricane, which it could have if Hurricane had used its cash to buy back shares, but it rewards CAIH and all shareholders with cash. The board of directors at Hurricane called CAIH's unsolicited bid ``ridiculously low'' and ``unprofessional''. And it said the bid violates the spirit of the CAIH partnership, which called for a Kazakh presence with Western management and technology, said Hurricane chairman Bernard Isautier at the company's annual general meeting in Toronto on Tuesday. Isautier said an independent evaluation of Hurricane should be ready by mid-June that will give shareholders a better idea of what Hurricane is worth, at which time he would welcome a more reasonable bid for the entire company. The offer from CAIH valued Hurricane at C$10.25 ($6.61) for each of 18.4 million Hurricane shares, which at the time was a 20 percent premium to the shares' trading range before the bid. The stock rose C$1.55 to a new 52-week high of C$12 on the Toronto Stock Exchange on Tuesday. Neither Askar Alshinbaev nor Nurzhan Subkhanberdin, both Hurricane board members and executives of OJSC Kazkommertsbank, a Kazakh private bank that controls CAIH, were present at the Toronto meeting. ``I have a lot of sympathy with the young, aggressive businessmen of Kazakhstan...but they have not proved they can run an industrial company,'' Isautier said. Shareholders at the annual meeting questioned the ability of CAIH to pay for the shares if tendered without using Hurricane's balance sheet as leverage. Skeptical shareholders speculated that the Kazakh bank that controls CAIH, is eyeing Hurricane's cash flow in an attempt to mitigate losses at operations it has inherited, including a 50 percent interest in the Kazakh state airline and a 30 percent stake in the country's local phone company. Isautier said the decision was made to pay the $200 million dividend, which equates to about C$4 a share, instead of using the firm's cash resources to buyback shares, because Central Asian would not agree to sell any of their shares. ``The share buyback was not feasible without the cooperation of our 30 percent shareholder,'' which refused to sell shares along with the buyback to keep its ownership level constant, Isautier said. If CAIH were to win more control, ``it would change the image of the company (Hurricane) in North America and Western Europe,'' he said. The debenture is redeemable at par at any time by the company, and is amortized over a five-year period with annual scheduled payments. It is expected to be distributed to shareholders around June 22. Hurricane also said capital expenditures of $150 million in 2001 and $200 million in 2001 will allow it to raise daily production levels to 180,000 barrels of oil in two to three years from the 99,000 barrels a day currently being produced. The company also expects to cut by as much as half its transportation costs, which presently are at $12.50 a barrel, as it buys capacity in pipelines, brings down costs at its refinery, and benefits from an expected drop in Russian rail fees. Hurricane's Isautier, who took the chief executive's role when the company emerged from bankruptcy in March 2000, is experienced at driving a firm's value up in light of a hostile takeover. He sold ethylene producer Polysar Inc. to Nova Corp. in 1988 after a lengthy battle that saw the initial bid price of C$11.20 a share rise to a final takeover price of more than C$31. ($1 equals $1.55 Canadian)