21 April 2004 01:50
Yukos`s credit rating cut back after ban on selling assets OIL AND GAS:
Yukos, Russia's largest oil company, was yesterday hit by a severe
downgrade from Standard & Poor's and Moody's Investors Service
to a near default level over concerns that the company may lose control over
its cash-generating subsidiaries.
Yukos's share price fell 5 per cent yesterday, taking losses since the
start of last week to more than 14 per cent. However some brokers claimed
there has been some active buying of Yukos shares over the past few days
which had prevented the share price falling further.
The downgrade by Moody's from Ba1 to B1 of one of the country's
most liquid stocks is a blow for investors in the Russian market. S&P cut
its rating from BB- to CCC. "Yukos is seen as a proxy and a benchmark
for the Russian market as a whole," said Eric Kraus, strategist with
Sovlink, a Moscow-based brokerage.
The move follows a ruling by a Russian court banning Yukos from selling or
transferring any of its assets in connection with a Dollars 3.5bn tax claim
brought by Russians authorities at the end of last year.
Yukos is challenging the claim. However S&P's said that if Yukos
loses the tax case, it "may find itself under threat of forced sale of
core assets, insolvency procedures, or effective nationalisation of its
assets".
"There is also mounting political pressure on the company, which might
weaken Yukos's position in the tax case," said Elena Anankina,
S&P's credit analyst.
Yukos has been under attack from the authorities since the arrest of its core
shareholders, including Mikhail Khodorkovsky, a former chief executive, last
year. The tax evasion hearings are expected to start next month and could
coincide with the trial of Mr Khodorkovsky in June.
S&P also downgraded Sibneft, an oil company 92 per cent owned by Yukos.
The two companies had agreed to merge but Sibneft's core shareholders
asked for the merger to be reversed following Mr Khodorkovsky's arrest.
"The downgrade and the CreditWatch status on Sibneft reflect increasing
uncertainties about the potential reversal of the acquisition of Sibneft by
Yukos and, consequently, about Sibneft's shareholding structure and
financial policy," said Ms Anankina.
The rising pressure on Yukos has also put its merger with Sibneft, controlled
by Roman Abramovich, into question. The companies agreed to merge one year
ago, but following the arrest of Mr Khodorkovsky, Sibneft asked to reverse
the merger.
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