21 April 2004 14:15
YUKOS DOWNGRADE A BLOW TO INVESTORS ON RUSSIAN MARKET
MOSCOW. April 21 (Interfax) - A decision by international rating agencies Moody's and Standard & Poor's
to downgrade Yukos will complicate efforts to reverse the merger deal with Sibneft even further, and will remind
investors of the ongoing capital risks in Russia.
"Future investors in Russia would be advised to watch this affair's outcome carefully. Yesterday's
downgrading of one of Russia's most liquid stocks was a blow to investors in the Russian market," the
Financial Times wrote on Wednesday.
Standard & Poor's said that the weakness of Russia's institutions
was being used opportunistically to try to unwind the takeover via
Yukos shares fell 4.5% to $13.15 per share on the Russian Trading System on Tuesday, and 4.6% to 379.3 rubles on the
MICEX. Sibneft fell 1.5% to $3.35 per share on the RTS, but on the MICEX the last deal was closed at 98.3 rubles - up
0.2%.
regulatory and legal pressure, the newspaper reports.
Moody's downgraded the company's main rating from Ba1 to B1 and its issuer rating from B2 to Ba2 following
a court decision to freeze part of the company's assets and a suit filed by the tax authorities to reclaim taxes.
The agency said that it would continue to monitor the company, with possible negative implications.
The agency said that the court ruling and the tax claims are creating significant additional financial pressure on
Yukos. Although this does not affect the company's core activity, the ruling restricts the company's
flexibility when considering various options for meeting the Tax Ministry's demands,
In particular, if the company is obliged to pay $3.5 billion in the near future, it may encounter problems with
maintaining liquidity, as it does not have sufficient funds and its borrowing possibilities are restricted the agency
said.
Standard & Poor's has lowered its long-term corporate credit rating on Yukos to 'CCC' from
'BB-' and on Sibneft to 'B' from 'B+', following the court decision.
The ministry filed a lawsuit with the Moscow Arbitration Court
seeking to recover the money identified in the tax inspection.
Simultaneously, it filed a petition with the same court seeking to
The downgrade and the potential downside of the CreditWatch status on Yukos reflect Standard & Poor's
concerns about the increasing risk of Yukos losing ownership rights over its key cash-generating subsidiaries and
uncertainties regarding liquidity, Standard & Poor's said. There is also mounting political pressure on the
company, which might weaken Yukos' position in the tax case; the court hearings are scheduled in May, the agency
said.
The arbitration court's decision stipulates that Yukos has been
banned from "alienating or burdening the assets belonging to it,
including the ban on transferring its own shares to another
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 nationalization of its assets," the Financal Times reports.
The court will hear the suit on May 7 and, according to Moody's
experts, could result in demands that the company makes payment
The Russian Tax Ministry has accused Yukos of using domestic offshore areas for tax evasion. Examining Yukos'
tax payment in 2000, the ministry billed the company for over 99 billion rubles in taxes, fines, and penalties.
secure the fulfillment of the suit by banning the registration companies OAO Reyestr, ZAO M-Reyestr, and OAO TsMD
from making any amendments to their registers concerning Yukos deals with securities. The Tax Ministry said the
Arbitration Court satisfied the petition, issuing corresponding warrants for the court bailiff service.
shareholder's trust management, and also shares in the chapter capitals of other companies, and securities,
except for the principal types of the products it produces."
immediately.
Yukos will have the possibility to appeal, but if this does not happen, the company may encounter a shortage in
liquidity and the tax authorities may seize its property. On the other hand, the agency said that the aim of these
measures may be only to force Yukos to agree to pay the tax demand, which the company has been challenging for several
months already.
[Interfax] |
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