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An air of resignation hung over a short Nelson Resources Ltd. conference call Monday as two company officials said minority investors in the company are lucky that OAO Lukoil is extending a takeover offer to them after already securing majority control of the firm.

Lukoil - Russia's oil giant - is buying Nelson for $2-billion (U.S.), an offer that equates to $2.57 (Canadian) a share, which is 13 per cent less than the $2.96 close on Sept. 29, the day before the offer was revealed. Lukoil made the deal directly with three large Nelson shareholders, cutting out management from the takeover bid.

"Nothing legally forced Lukoil to make an offer for 100 per cent of the shares on the same terms as those offered by private treaty to the former majority shareholders," said Gilles Thieffry, a Nelson director that headed a special committee that looked at the Lukoil deal.

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Mr. Thieffry is a partner at the Geneva office of Pestalozzi Lachenal Patry, one of Switzerland's top law firms. His specialties include structured finance deals, capital markets and banking.

Nelson produces oil in Kazakhstan and is listed on the Toronto Stock Exchange. Mr. Thieffry said that the Lukoil move to buy majority control privately is legal under Canadian law and he said it was gracious of Lukoil to extend the offer to minority shareholders.

"Irrespective of what some people may think, I think it is much to their credit," he said.

This morning's conference call, occurring four days after the deal was official deal was sealed, was only 20 minutes long and far less eventful than a 2½-hour call two weeks ago that occurred three days after the Lukoil offer was first revealed.

On the last call, management was berated by angry shareholders. Monday, there was just a single voice of discontent, from a private investor that said he hoped larger institutional shareholders takes legal action.

"For this to be going on in this day and age, and for minority shareholders to be treated this way, it would only happen in of course Russia," the investor said. "It's grossly unfair and I'm mad."

Mr. Thieffry responded by saying the deal has been done honestly and the majority shareholders got the same deal as minority shareholders.

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"Having dealt with some of those majority shareholders for the best two years, I would vouch for their integrity," Mr. Thieffry said.

Mr. Thieffry said Nelson management earlier this year - he didn't say precisely when - offered to auction off the company but the idea was rejected by the majority shareholders, who are Cott Holdings Group Ltd. of St. Kitts-Nevis, Energy Investments International Ltd. of the British Virgin Islands and Netherlands Antilles-based Central Asian Industrial Holdings NV.

Cott is owned by Baltabek Kuandykov, who is also Nelson president and who was head of Kazakhstan's state oil company in 2000 when the firm sold Nelson its first oil field in the country for 2 cents (U.S.) a barrel of proved and probable reserves.

Nelson at the time was a failing gold miner in Tajikistan. Its main asset in 2000 essentially was its listing on the Toronto Stock Exchange.

About 1½ years later, Mr. Kuandykov became Nelson president. Lukoil is buying Nelson for $7.40 (U.S.) a barrel of reserves, which is still less than the $8.31 that China National Petroleum Corp. is paying for PetroKazakhstan Inc.

Energy Investments is majority controlled by Arvind Tiku and Mirbulat Abuov, who are both Nelson board members and Kazakh businessmen. Askar Alshinbayev, another Nelson board member and major Kazakh banker, is the largest investor in Central Asian.

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Mr. Thieffry said he didn't know when the majority shareholders approached Lukoil but said the worsening fortunes of small international oil companies in Kazakhstan as the state asserts more power was a big factor behind the sale.

"Without suggesting many things, I would look at the overall context of this transaction and you may, if you read some of the press releases coming from central Asia, you may have an indication as to maybe one of the reasons that could be the background to their decision," he said.

Pressed on when the majority shareholders approached Lukoil, Mr. Thieffry said: "Hand on heart, the answer is really: I don't know."

Asked if he could find out, Mr. Thieffry said: "The best thing would be, I would suggest, to ask the question directly to the individuals concerned and to the entities concerned."

The Globe and Mail has repeatedly tried but reach Cott and Energy Investments but has not been successful. Central Asian has been reached, but its London-based legal counsel, Paul Marchand, would not comment on the question of when the shareholders approached Lukoil.

On Sept. 15, five Nelson executives sold 4.7-million shares for $2.82 (Canadian), including Nelson CEO Nick Zana and Mr. Kuandykov.

Lukoil approached Mr. Zana on the afternoon of Sept. 15, Mr. Zana reconfirmed today. Mr. Zana was not informed of the majority shareholders dealing privately with Lukoil at that meeting, he said today. Mr. Zana said he first heard of the private deal on Sept. 21.

Mr. Zana said that between Sept. 30 - when Lukoil's offer became public - and Oct. 12 - the day before it became official - contacted potential Nelson suitors that had approached the company earlier this year, prior to the end of August.

"None of them was interested in making any further offers," Mr. Zana said.

On Oct. 3, Lukoil disclosed it had deals signed for majority control of Nelson. As of Sept. 30, Lukoil had those deals done with the major shareholders for control of the company, as disclosed on Sedar in Canada on Oct. 4.

The deals made it impossible for other bidders to rescue Nelson from Lukoil's below-market offer.

A circular on the Lukoil offer will be available within two weeks, Mr. Thieffry said, but it's not certain that key details will be disclosed.

"It could be the case that we will have a fairly detailed relation of the various events that led to this transaction," he said. "Whether one will enter into the specifics, I'm sure that our outside counsel will have a say on that, whether they can enter into the specifics on the transactions that were taking place or took place between the various former majority shareholders and Lukoil.

"Genuinely, I don't know."

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