Sibir Plunges 60% on Russian Billionaire ‘Bailout’

By Greg Walters and William Mauldin

Dec. 3 (Bloomberg) -- Sibir Energy Plc, a London-traded Russian oil producer, lost more than half its value after announcing plans to buy $340 million worth of property from billionaire shareholder Chalva Tchigirinski.

Sibir slid 61 percent to 39 pence at 1:31 p.m. in London, valuing the company at about 155 million pounds ($228 million). Sibir’s board “concluded that the company must take over the bulk” of Tchigirinski’s real-estate business, the company said in a statement today.

“My advice for shareholders is to fire the management,” said Ivan Mazalov, a fund manager at Prosperity Capital Management in Moscow who helps oversee $5 billion of assets, and doesn’t own Sibir shares. “Investors in this company certainly don’t like the way it is bailing out the company’s major shareholder.”

Sibir is the second company in as many months to provoke criticism for buying assets to help billionaire investors, after Russian power generator OAO OGK-3 announced plans to purchase shares in companies controlled by Vladimir Potanin’s Interros holding company. Potanin owns a stake in Norilsk Nickel, which controls OGK-3. The Moscow brokerage dubbed OGK-3 the “bank of Interros” in a client note.

Stalin’s Hotel

Sibir has agreed to buy the Sovietsky Hotel in Moscow, built in 1952 under the order of Soviet leader Josef Stalin, among at least $158.9 million of real-estate, oil refining and marketing assets from companies connected to Tchigirinski and shareholder Igor Kesaev.

“This amounts to a significant transfer of value from the company to one of its shareholders,” said Alexander Burgansky, oil and gas analyst at Renaissance Capital. “It looks like the minority shareholders will not really have a say.”

In a separate statement, Sibir said Finance Director Alexander Betsky resigned yesterday, and that his replacement will be announced in due course.

Sibir is seeking to preserve its shareholder structure, after the global credit crisis “had a domino effect on Mr. Tchigirinski’s financial position,” according to its statement today.

Tchigirinsky’s net worth was estimated at $2.5 billion by Forbes magazine in May, making him the Russia’s 44th-richest man.

To contact the reporter on this story: Greg Walters in Moscow gwalters1@bloomberg.net