01 June 2004 03:36
Yukos to Lose Majority in Sibneft
Yukos lost control over Sibneft on Monday after a Moscow court ruled to invalidate a share emission used in the
failed merger of the two oil majors last year.
The Moscow Arbitration Court upheld a lower court's decision to annul a share emission Yukos used to acquire
57.5 percent of billionaire Roman Abramovich's Sibneft.
Initially launched by two Abramovich-affiliated firms, the cancellation of the emission leaves Yukos with a 34.5
percent blocking stake in Sibneft. According to the ruling, Abramovich's stake in Yukos will drop from 26 percent
to 11 percent.
Yukos plans to appeal the ruling, said Yukos spokesman Alexander Shadrin.
"The court's ruling returns 57 percent of Sibneft to core shareholders, thus completing a substantial
portion of the demerger process. Sibneft and its core shareholders will fulfill the will of the court," said
Sibneft spokesman John Mann.
Sibneft initially won the case in March after a lower court ruled in favor of Cyprus-registered Nimegan Trading Ltd.
and N.P. Gemini Holdings Ltd., which held that Yukos shareholders were not given appropriate notice prior to the
emission.
The Moscow Arbitration Court on Monday ordered the Federal Service for Financial Markets to cancel the additional
share emission within five days.
During the multibillion dollar merger process last year, Yukos coughed up treasury shares for a 14.5 percent stake in
Sibneft and $3 billion in cash for an additional 20 percent. Yukos' additional share emission went toward the 57.5
percent stake in Sibneft. As a result of the deal, Yukos gained a 92 percent majority stake in Sibneft.
The deal began to crumble following the arrest of Yukos CEO Mikhail Khodorkovsky on Oct. 25 on charges of large scale
tax evasion and fraud. Khodorkovsky's trial started last week, and he faces up to 10 years in jail if
convicted.
Monday's ruling came as Yukos is battling a $3.4 billion claim for unpaid taxes in 2000. The Moscow Arbitration
Court adjourned until Wednesday the hearing of Yukos' appeal to the tax bill.
Yukos said last week it would have $1.2 billion in cash by the end of June and 70 percent of the tax bill by the end
of the year.
Currently all of Yukos' assets have been frozen by a court on the request of tax authorities. The oil giant is
therefore unable to sell any parts of its vast holding to pay the bills. The freeze also appears to be preventing Yukos
and Sibneft from completing their divorce.
The court ruled that the additional shares issued last year were are not part of the frozen assets, but the rest of
Yukos' stock cannot be sold or transferred.
The tax bill, assets arrest and Yukos' debt of $2.6 billion -- amassed during the Sibneft merger -- have all led
to fears that the company may end up bankrupt.
However Yuganskneftegaz, Yukos' largest production unit, said Monday that it has become a guarantor for its
parent company's loans. Yukos borrowed $1 billion from a group of Western banks. Another $1.6 billion loan was
organized by Societe Generale but was presumably provided by Yukos' parent company, Group Menatep.
Yuganskneftegaz's "move has been done to provide an additional guarantee for the creditors," Shadrin
said Monday.
Although Yuganskneftegaz's stock is also under arrest as part of the Yukos empire, the property owned by the
production unit itself appears to be outside the asset freeze, sources close to Yukos said Monday. Creditors have warned
the oil major earlier this month that they will seize Yukos export revenues accounts should the company fail to meet its
debt obligations.
Staff Writer Catherine Belton contributed to this report.
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[The Moscow Times] |
RUSSIA IN FACTS
