20 May 2004 03:38
Jailed Tycoons Circle Wagons
Jailed billionaires Mikhail Khodorkovsky and Platon Lebedev won't let go of their multibillion-dollar empire
without a fight.
Their holding company, Group Menatep, shocked the market Wednesday by warning that its own subsidiary, Yukos, may
default on a $1.6 billion loan it gave the oil giant in October.
The warning, which came as prosecutors launched another raid on Yukos as part of their ongoing tax probe, paves the
way for Menatep to tap Yukos' revenue stream, and could help it get a place on the external management committee in
the event Yukos is declared bankrupt.
Menatep also said Wednesday that it had sold its stakes in Trust investment bank and Bank Menatep St. Petersburg to
their respective management teams, another move apparently designed to guard assets ahead of three potentially
financially crippling trials -- the $1 billion fraud and tax evasion cases against Lebedev and Khodorkovsky and the $3.4
billion tax case against Yukos.
Both banks have been raided as part of the nearly yearlong legal assault on Menatep.
What started out as another dismal day for Yukos, however, ended on a positive note. Despite plunging on news of the
default warning and the tax raid, Yukos' shares ended the day slightly up after a court ruled that the Federal Tax
Service could not press its claims for $3.4 billion in back taxes until after the company's appeal is heard May
28.
While investors found the court ruling positive enough to help reverse what was nearly a double-digit drop, many
analysts said it was essentially a nonevent.
"This ruling does nothing but delay the issue for a week. Yukos had a lot of time to pay the claim anyway,"
said Adam Landes, oil and gas analyst at Renaissance Capital.
If Yukos loses the appeal, it will have to pay the claim within a month. But if it does not meet that deadline,
another three months will have to go by before authorities can start bankruptcy proceedings, Landes said.
The threat of bankruptcy is real, however, because even if Yukos manages to satisfy the $3.4 billion demand, which
was levied for the year 2000, the company could face similar bills for the subsequent years. And officials are showing
no signs of letting up.
The raid Wednesday is connected to alleged tax fraud by a Yukos subsidiary, Samaraneftegaz, to the tune of 3.2
billion rubles ($110.4 million) between 1996 and 2000.
One source with knowledge of Wednesday's raid said that 15 investigators from the Samara region
prosecutor's office spent all day at the company's headquarters on Dubininskaya Ulitsa waiting for documents
related to Samaraneftegaz. They left at around 8 p.m. with documents, Interfax reported.
The companies are accused of hiding profits by using a kind of transfer pricing -- specifically, by treating sales of
pure oil as oil-containing fluid, which trades at a lower price.
"These guys have been raided so often, I wonder if their welcome mat has not worn thin," said James
Fenkner, senior strategist at Troika Dialog.
Indeed, it was the default warning, not the raid, that initially rattled the markets, although it should not have
come as a complete surprise.
After a group of creditors, led by France's Societe Generale, warned last month that the tax claim against Yukos
could lead to a default on a $1 billion syndicated loan, the company's chief financial officer, Bruce Misamore,
said he expected a second warning, as the terms of the two loans in question were similar.
Several industry analysts polled Wednesday described the warning issued by Menatep as a defensive move, a hedge
against any government attempt to bankrupt or renationalize the company.
Landes, however, said the real target is increasingly looking like Menatep, and not Yukos.
Yukos has a market value of just under $30 billion, making it by far Menatep's most valuable asset.
Many investors believe that "Menatep is trying to establish a place in the pecking order," said Paul
Collison, oil and gas analyst at Brunswick UBS. "Some investors feel that [Yukos] insiders like Menatep are getting
ready for a potential worst-case scenario."
Last week, Menatep named three men with considerable experience in offshore structures as a replacement for managing
director Stephen Curtis, a mastermind of Menatep's vast interlocking ownership web who died in a helicopter crash
in March.
If the endgame is near, Fenkner said, Menatep appears to be playing it the best it can.
"People who own Yukos should take comfort in the fact that Menatep is a big lender to Yukos. That matters,
because in bankruptcy proceedings, traditionally, the creditors are put on the management committee," Fenker
said.
"And to get on the committee, [Menatep] needs to be as aggressive now as the foreign banks are. The nervousness
with the share price just underscores that the market is still trying to understand where this thing goes," said
Fenkner.
Authorities themselves seem unsure of where this case is heading, said Eric Kraus, head of equities at Sovlink
brokerage.
"There is a certain degree of disarray, even within the Russian government, as to exactly how to deal with the
issue," Kraus said.
Staff Writer Valeria Korchagina contributed to this report.
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[The Moscow Times] |
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