To: TobagoJack who wrote (185014 ) 3/8/2022 6:12:52 PM From: TobagoJack Read Replies (1) | Respond to (2) I remain agnostic, but it might just be that weaponising economies, literally, for war war, shall likely prove a very foolish idea with much capability / capacity for TwoAPuc (The Worst of All Possible Unintended Consequences) and the people who led part of the planet on the absolutely botched pandemic response choreographies have just sent their respective economies to face down Team Russia (!?). Continuing Bloomberg notesWe have talked a few times recently about the fact that big international oil companies have joint ventures in Russia and decided pretty hastily to exit them. Here is a Wall Street Journal story about “ How Oil Giants’ Bets on Russia, Years in the Making, Crumbled in Days .” As we have discussed, it is one thing to say “we are exiting our Russia ventures” and another thing to figure out how to actually do that. You can’t exactly sell the shares of these joint ventures on the open market, and abandoning them essentially means selling them to Russian companies for free. Conceptually the right approach is something like:Lawyers, accountants and outside advisers are working to determine how the oil companies can restructure their Russian holdings. They are exploring complex options for ring fencing them from ongoing operations—transferring the assets to separate corporate entities—while winding them down and trying to preserve as much value as possible, some of the people close to the companies said. Options include escrow accounts with shareholders named as beneficiaries and special-purpose entities walled off from continuing businesses. BP would no longer own the asset, so it could say that it was getting out of Russian oil ventures, which is the point here.current shareholders, so that if you owned the company’s stock in March 2022 and the asset pays out in 2023, you get a share of the proceeds even if you have sold your stock. (The theory being that, since you owned the stock at the time the company abandoned the asset at zero, you were the one hurt by that and you should get the money.)If you’re doing that you could make the escrow claims … tradable? Like, issue a tracking stock on your abandoned Russian JV assets? That seems distasteful and yet somehow correct. If you want to get rid of your JV assets, can’t sell them, and don’t want to abandon them to your Russian partners, one move is to effectively spin them off to your shareholders. Then you don’t own them anymore, but you have maximized shareholder value. And then if your shareholders don’t want to own Russian JV assets they can sell them, in indirect tradable-escrow-claim form to someone who does. (Who is that?) Why shareholders? When Shell Plc bought Russian oil after the invasion of Ukraine, it said that it “will commit profits from the limited amount of Russian oil we have to purchase to a dedicated fund” that will be used “to alleviate the terrible consequences that this war is having on the people of Ukraine.” (It has since decided to stop buying Russian oil .) I suppose one could do the same thing with Russian JVs: Put them in a special-purpose entity and escrow any proceeds to help Ukraine? In some loose sense the JV assets belong to the shareholders now, so it’s weird for the company to donate them, but that is loosely true of Shell’s oil trading profits too and that didn’t stop it from donating them. Still elsewhere in oil:Ban Russian Fuels to Pressure Putin.”Considers Buying Stakes in Russian Energy, Commodity Firms.”Russia’s Oil Industry .”tankers at sea despite ‘big unknown’ over who will buy oil.”Maduro hails ‘cordial’ talks with US as west seeks new oil supplies.”
