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Corporate Finance

The Team

Selected Recent Transactions

Deal list since inception

Advisory work for Rusenergo Fund, 2010-2014



Selected Recent Transactions

Sale of controlling interest (51%) in Eurasia Drilling Company (EDC) to Schlumberger

On July 20, 2017, Eurasia Drilling Company, Russia’s largest provider of drilling services, announced that its shareholders have agreed to sell to Schlumberger, the leading international OFS company, a controlling (51%) stake in EDC. Strategic agreement between EDC and Schlumberger extends successful long-term relationship in the conventional land drilling market established by the two companies in 2011.

The transaction represents an outstanding example of cooperation between a strong Russian player and a leading global investor. The deal confirms a firm confidence by global industry leader in the growth prospects of the Russian oil and gas sector and the long-term success of EDC.

Dr. Alexander Djaparidze, EDC's Chief Executive Officer commented on this transaction:

"I warmly welcome Schlumberger as our majority shareholder. It builds on our strategic alliance with Schlumberger since 2011 and our mutually beneficial business relationship since 2007. The combination of the technology knowhow and operational expertise of Schlumberger coupled to the financial strength of the Investment Funds, brings significant benefits to our customers and the Russian conventional land drilling market."

Xenon acted as a financial advisor to EDC.

Eurasia Drilling Company (EDC) agreed key terms of investment in the Company by a consortium of RDIF, RCIF and leading Middle Eastern co-investors

On June 1, 2017 Eurasia Drilling Company announced the agreement of principal terms for an investment in the Company by a consortium of the Russian Direct Investment Fund (RDIF), the Russia-Chinа Investment Fund (RCIF, established by RDIF and China Investment Corporation) and leading Middle Eastern co-investors.

Dr. Alexander Djaparidze, EDC's Chief Executive Officer commented on this transaction:

"We are very pleased that we have agreed principal terms for an investment in the Company with these pre-eminent funds. We welcome their recognition of the leading performance and value potential of the Company. We are confident that our new relationship with these prominent investors will be beneficial to all parties."

Xenon acted as a financial advisor to EDC.

$200mm sale of 75% stake in operating business of CTC Media to UTH Russia, followed by a cash-out merger transaction to allow a buyout of shares held by Modern Times Group (MTG) and public minority shareholders and subsequent delisting

On May 20, 2016 XENON successfully finalised restructuring and delisting of CTC Media, the leading Russian independent media company. Shareholders including MTG, an international entertainment group, and public minority shareholders have received their funds in exchange for the shares that were cancelled and delisted from the US stock market on May 19, 2016.

XENON acted as a financial advisor to CTC Media and the Board of Directors' Special Committee on a series of transactions through which the large-scale restructuring was completed. XENON got involved with CTC Media in May 2015 at a very critical moment when there was no clarity on the potential buyer and we only had just a few months to find a solution and implement changes in order to meet the approaching deadline for compliance with the new Russian Mass Media Law, which limits the foreign ownership in the domestic mass media companies to 20% starting 1 January, 2016.

Together with the management team XENON reapproached a number of most likely buyers trying to come up with really tailored solutions instead of running a typical sell-side process. As a result, XENON managed to solicit interest from a Russian large privately-owned commercial TV broadcasting group - UTH Russia, jointly owned by Alisher Usmanov and Ivan Tavrin. Addition of CTC Media’s business to UTH Russia’s existing portfolio looks complementary and beneficial to both parties. Despite the increasingly challenging market environment, CTC Media Inc. announced that it has signed a definitive agreement with UTH Russia on September 25, 2015 and the sale transaction successfully closed on December 23, 2015. The sale brought the operating business of CTC Media into compliance with the Russian Mass Media Law. The total cash consideration in connection with the sale was $193.1 million.

In parallel to the sale process XENON worked on a cash-out merger transaction in which all available value is distributed to public minority shareholders and MTG provided that the amount of such distribution is maximised. Decision making on such structuring option was dependent on finding a solution for Telcrest, another major shareholder, which could not be involved into any distribution of profits due to sanctions imposed by the US.

In the final structure Delaware-based CTC Media Inc. sold 75% stake in the Russian asset to the Russian buyer followed by distribution of these funds in addition to available cash on hands to 75% shareholders of the listed Delaware-based entity. 75% shares in CTC Media Inc. were subsequently cancelled and technically Telcrest remained the only shareholder of the Delaware-based entity, which in turn was the only beneficial owner of 25% stake in CTC Media’s operating assets. Specifically, the shares acquired from MTG and public minority shareholders in the merger were cancelled in exchange for a cash consideration payment of $2.0503 per share which is in the upper half of the range of $1.77 to $2.19 per share that was approved by the shareholders. The total amount for distribution to the shareholders was c.$239 million.

XENON had to implement all required steps to bring both transactions to closing. Specifically, the transaction was subject to approvals on both sides of the Atlantic. In Russia an approval from the Federal Antimonopoly Service was received l. It was also established that a license from the United States authorities (the Office of Foreign Assets Control of the U.S. Treasury Department) with the explicit approval of the deal was required even though the proposed transaction didn’t imply any distribution of funds directly to Telcrest, the sanctioned shareholder. XENON worked hard to ensure seamless execution of the agreed plan which involved weeks and months of active dialogue with the US regulators, including Internal Revenue Service, and communicating with minority shareholders.

It is noteworthy to mention that this transaction is the most complex project XENON has ever worked on. It is now fully completed and that UTH Russia and Telcrest jointly own CTC Media which is fully in compliance with the Russian mass media legislation.

Core shareholders and certain management of Eurasia Drilling Company (EDC) are taking the Company private

On 20 January 2015, EDC announced that it had agreed a strategic partnership with Schlumberger pursuant to which EDC would have been taken private through a merger with a bidding company established by the core shareholders and Schlumberger would have acquired, through a series of transactions, a stake of approximately 46% in EDC as a private company for $1.7bn. Due to the lengthy waiting period for the transaction review by Russian governmental authorities, EDC and Schlumberger extended the long stop date for closing the transaction on several occasions until 30 September 2015.

Although the initially contemplated minority sale to Schlumberger was finally suspended on 30 September 2015 for regulatory reasons, EDC announced on October 12 that it had reached an agreement with management and significant shareholders on the terms of going-private transaction. Original offer price of $10 per GDR, proposed on Oct. 8, was increased by 17.5% to $11.75 per GDR, which is 19.9% over the volume weighted average share price during the week preceding the initial announcement.

Xenon acted as a financial advisor to the core shareholders of EDC.

The joint acquisition of a 50% stake in the Etinde block offshore Cameroon by New Age and LUKOIL for $250mm

XENON acted as financial advisor to New Age and LUKOIL on the transaction, and after its announcement in summer 2014, continued to coordinate the completion process. Specifically, the necessary approvals were obtained from the Cameroonian Government, as well as from the National Oil Company, for whose representatives a special visit to LUKOIL's projects in Russia was organized. The final stage required the receipt of approval of the transaction from the Cameroonian President and the subsequent publication of his decree in the official gazette. With these requirements fulfilled, on March 16th, 2015, the transaction became legally closed.

Following the completion, New Age has become the operator of Etinde that together with LUKOIL's backing substantially reduces execution risk. The primary undertakings of the consortium will now be drilling two appraisal wells to confirm the potential of the field, and reaching FID, scheduled for 2016.

$50mm capital injection by a Russian investor into New Age, an independent oil and gas company with assets in Africa and Kurdistan

In 2013 XENON brought together a consortium of Russian investors to acquire a significant minority stake in New Age for $90mm. Since then, our team has assisted the Russian investors with managing their stake, while also working with the Company on the implementation of its strategic initiatives (such as an acquisition of a 50% stake in Etinde together with LUKOIL). During this period of time, New Age's 2P/2C reserves have grown from 232mmboe to 589mmboe. In addition, the Company has launched commercial production at two of its most important fields in Congo and Kurdistan. Two other key projects are approaching either FID (Cameroon) or a commencement of production (Nigeria). Furthermore, New Age's resource potential has significantly expanded as result of new substantial discoveries of hydrocarbons.

This rapid development of the Company spurs the need for new capital. In this regard, XENON successfully structured a new $50mm investment in New Age for one investor in February 2015.

The transaction is particularly relevant today as, with a challenging situation in Russia, it is extremely important for Russian companies and investors to gain access to attractive investment opportunities in other markets to diversify the business model. Project selection in the oil and gas sector has become even more complex with the current oil price dynamics. It requires highly disciplined investment strategy while the strategic attractiveness of many fields has decreased.


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