On December 29, 2006, CITIC Group, through a wholly owned subsidiary, completed the acquisition of the Kazakhstan petroleum and oil service assets of Nations Energy Company Ltd., China's third-largest oil and gas acquisition, by way of a plan of arrangement for US$1.91 billion before adjustments. The transaction involved the spin-out of the non-Kazakhstan assets of Nations at closing followed by the sale to CITIC of the shares of Nations in a court-approved arrangement transaction.
Nations' 94.6 per cent subsidiary, JSC Karazhanbasmunai (KBM), a joint stock company formed under the laws of Kazakhstan, holds 100 per cent of the mineral rights to develop the Karazhanbas Oil and Gas Field in Mangistau Oblast, Kazakhstan until 2020. Nations' service assets include a 100 per cent interest in Argymak Trans Service LLP, which provides transportation services and Tulpar Munai Services LLP, which provides well drilling, workover and training services to KBM.
CITIC, headquartered in Beijing, is one of the largest diversified investment groups in China and a trans-national conglomerate with operations throughout Asia, Australia, North and South America, Africa and the Middle East. It has total assets in excess of US$100 billion and 70,000 employees.
Stikeman Elliott LLP acted as lead counsel to CITIC, with a legal team including David Lefebvre (M&A-lead), Charles Kraus (M&A), David Weekes (tax), Barbara Johnston (employment and privacy), Paul Collins and Debbie Salzberger (competition), Lou Cusano (litigation), Glenn Cameron, David Taniguchi, Lisa Grams and Bradley Squibb (corporate). Denton Wilde Sapte LLP, led by Joel Benjamin, acted as Kazakhstan counsel to CITIC.
ANZ Investment Bank, led by David Scott, director, mergers & acquisitions, London, acted as financial advisor to CITIC with respect to the transaction.
Nations' team was led by Philip Hirschler, Nations' general counsel & assistant corporate secretary, who was assisted by Salikha Brimzhanova, general counsel of KBM and her team. Macleod Dixon LLP represented Nations and its security-holders in the transaction. The Macleod Dixon team was led by Tad Gruchalla-Wesierski (M&A, securities, corporate and banking) with a team that included Andrew Love, Mark Gerlitz, Kathy Krug, Jack MacGillivray, Ken Potter, Justin Ferrara, Crae Garrett and Robert Froehlich. Working with Tad Gruchalla-Wesierski on the banking side were Mike Wylie and Cam Bowman. On Canadian tax matters, Craig Maurice, Ed Heakes and Ryan Shewchuk carried the load for Macleod Dixon LLP. Maxim Telemtayev of Macleod Dixon ELP in Almaty, Kazakhstan provided advice concerning Kazakhstan regulatory and other matters with the assistance of Alexey Bukhtiyarov. Chadbourne and Parke LLP's Nabil Khododad and Rubin Weston advised with respect to certain English law matters and assisted Macleod Dixon LLP on certain matters with respect to London-based European Bank for Reconstruction and Development's equity interest in Nations and the repayment of its financing of an Azerbaijan project of Nations. Chris Barry and Kimberley Anderson of Dorsey & Whitney LLP's Seattle office advised with respect to US securities and corporate matters while their partners, John Hollinrake and Michael Lindsay, respectively advised as to US tax and anti-trust matters. Troutman Sanders LLP of Hong Kong advised as to Chinese legal matters under the leadership of Douglas G. Smith and Olivia Lee with the assistance of Jingtian & Gongcheng of Beijing acting as People's Republic of China counsel.
With respect to the spin-out of non-Kazakhstan assets, Macleod Dixon LLP's work for Nations was assisted by Aydin Jebrailov of Macleod Dixon ELP in Moscow with respect to Azerbaijan state oil company approvals with the HGSM Tax and Legal Advisors of Baku, Azerbaijan assisting. On other matters relating to the spin-out, Macleod Dixon LLP was assisted by local counsel in the Cayman Islands (Appleby Hunter Bailhache), Cyprus (Lophitou Tsanos Nemitsa Co.), England (Clifford Chance LLP), Texas (Zimmerman, Axelrad, Meyer, Stern & Wise), and the British Virgin Islands (Harney Westwood & Riegels).
Litigation matters related to the arrangement were handled for Nations by Macleod Dixon LLP's Steven Leitl in Calgary, Alberta, Baker Botts LLP's John Anaipakos in Houston, Texas and Patrikios Pavlou & Co.'s Stavros Pavlou in Limassol, Cyprus. Credit Suisse were financial advisors to Nations under James Janoskey, director European Oil and Gas M&A.