27 April 2004 02:47
Yukos `CCC` ratings on watch neg after creditors` announcement
MOSCOW. April 27 (Interfax) - Standard & Poor's revised the implications of the CreditWatch status on its
'CCC' long-term ratings on Russian oil company Yukos to negative from developing, following an announcement by
the company's creditors of a potential event of default on the company's $1 billion loan, the rating agency
said in a news release.
"The rating action reflects the increasing risk of a liquidity
crisis at Yukos in addition to the already present uncertainties
The ratings on Yukos were originally placed on CreditWatch on October 31, 2003.
concerning taxes, ownership rights over key cash-generating assets, and governance due to the mounting political
pressure on the company," said Standard & Poor's credit analyst Elena Anankina.
A 'potential event of default'--as described in Yukos' loan documentation--restricts the
company's ability to raise funding and to withdraw cash from exporter accounts that are used to secure syndicated
bank debt (and do not require immediate repayment of debt).
"At present, Yukos appears to retain its ability to service its
debt via product revenues and cash held at subsidiaries," said Ms.
The announcement of a potential event of default by creditors indicates their concerns and, in Standard &
Poor's view, increases the chances of creditors announcing a full 'event of default'. This would trigger
cross-defaults whereby all the company's financial debt becomes immediately due and payable.
This would put further stress on Yukos' liquidity, which is already being pressured by a $3.5 billion potential
tax claim--the court hearing for which is expected in May--and by the freeze of its parent company's assets. These
assets include shares in all the company's key operating subsidiaries and in OAO Siberian Oil Co. (Sibneft; B/Watch
Dev/--).
Under the stress scenario, if Yukos loses the tax case or if an 'event of default' is announced by the
company or its creditors, Yukos might experience a liquidity crisis, forced sale of core assets, insolvency procedures,
or effective nationalization of its assets.
Anankina. "The company's ability to do so in the coming months will, however, largely depend on the course
of action taken by various arms of the Russian government and by the creditors, and we will continue to closely monitor
the situation." [RU ASIA EUROPE EEU EMRG ENR CRU AAA BNK LOA]
[Interfax] |
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