16 June 2004 00:00
Future of Yukos continues to worry investors
ByLine: Andrew Jack in Moscow
Investors continued to express fears yesterday that Yukos could be driven into bankruptcy amid reports that the
Russian government had rejected attempts by the oil group to settle its long-running dispute over unpaid taxes.
The company's shares closed down 8 per cent at $6.20, their lowest level in 30 months, dragging the
country's stock market down to a low for the year. The RTS market index dropped more than 4 per cent.
"Over the past two years the whole key to Russian growth has been investment by dedicated global funds. Even by
Russian standards, they are deciding they don't want exposure," said Paul Collison, oil analyst at Brunswick
UBS, a Moscow brokerage.
Yesterday's falls came ahead of the opening today of the criminal trial against Mikhail Khodorkovsky,
Yukos's former chief executive and largest shareholder, and his business partner Platon Lebedev, on charges of
fraud and tax evasion totalling nearly $2bn.
Yukos also faces an appeal this Friday against a $3.4bn additional tax bill for 2000, which it has warned could
trigger insolvency unless the court lifted an order preventing it from selling assets.
Yukos managers said they had submitted different proposals to the government on ways to pay the bill, including
issuing new shares, raising extra loans or selling company assets, to top up current cash of just $800m.
Yukos increased its debts by $1.25bn during the first quarter of the year, in a move that may help its majority
shareholders strengthen their negotiating position in the event the company goes bankrupt, an analyst said
yesterday.
Steven Dashevsky from Aton said Yukos had doubled to $2.5bn its loans from Yukos Capital of Luxembourg, on top of
$3bn made late last year to Yukos Mordovia, two connected companies. Added to an extra $1.6bn lent to Yukos by Menatep,
the debts could significantly add to the shareholders' influence in bankruptcy proceedings in any vote against the
state or rival oil groups.
Separately, Menatep, through which Mr Khodorkovsky and his partners control Yukos, is believed to be considering
handing over some of its shares to the government in settlement of the tax claims.
The move would dilute Menatep's 44 per cent stake, which is subject to a court freezing order, opening the way
to the government taking a significant equity participation itself or selling it to another group.
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