17 June 2004 11:18
Bankruptcy of Yukos oil company "virtually inevitable", says Russian paper
A Russian heavyweight broadsheet has said that officials are now almost openly admitting that it is virtually
impossible to stop the case against Yukos at the present stage. Moreover, it could be concluded from remarks made by
some representatives of the government and interested companies that Yukos and its owners have fallen victim to an
ordinary redivision of property, the paper said. It said businessman Boris Jordan, who proclaimed his readiness to act
as a mediator between Yukos and the authorities, had discussed the company's fate with high-ranking Presidential
Staff officials and received the go-ahead for the "takeover" of Yukos. The following is the text of the report
by Russian newspaper Nezavisimaya Gazeta on 16 June:
Yukos shares fell more than 11 per cent yesterday. As a result today the company, whose capitalization was once over
40bn dollars, is worth only 16bn dollars. The whole market fell along with Yukos - the decline in the Russian Trading
System index was over 4 per cent, and at one point the fall was so severe that an unprecedented step had to be taken and
trading was suspended. In all, the market has lost around 30 per cent over the last couple of months, which means tens
of billions of dollars.
Nevertheless, the Russian authorities are maintaining silence and are pretending that nothing special is happening.
However, investors are now "voting with their feet", and all the indications are that the fall in the market
is still not over - analysts and market players are sure that Yukos will be unable to avoid bankruptcy.
On Friday the Moscow Court of Arbitration is to consider an appeal from the Ministry of Taxes and Levies concerning
the court ruling on levying almost R100bn from the company for 2000. If the court finds in favour of the ministry's
appeal (and, judging by the results of earlier hearings, that is exactly what will happen), Yukos will have to find the
money or declare itself bankrupt.
The company states that, even if the restrictions on transactions involving assets are lifted, Yukos will be able to
repay only around 70 per cent of the tax debt before the end of the year. Bearing in mind the possible default on
credits totalling 2.6bn dollars, the tax inspections for 2001, which may end in further suits, and also the
authorities' resolute mood, the company's bankruptcy appears virtually inevitable.
Yukos is naturally trying to settle the conflict somehow (for instance, the other day the company's management
sent the government a letter containing proposals for settling the tax arrears and asking its shareholders for financial
guarantees), but few people now have confidence in these convulsive attempts, as shown by the situation on the stock
market. In the letter to Prime Minister Mikhail Fradkov the company's management asks the government to restructure
the tax debt and to lift the restriction on transactions involving company assets.
According to the UK's Financial Times, the letter also contains a proposal for an additional issue of Yukos
shares, which could be sold for cash or transferred to the authorities as payment of taxes. The Yukos management is also
considering the possibility of selling off some of its assets (for instance, the 34.5 per cent stake in Sibneft).
In the appeal to the company's main shareholders - Menatep Group - Yukos Management Board Chairman Simon Kukes
notes that Menatep could give the government guarantees of payment of the tax arrears for 20 per cent more than the
ministry's claims. The shareholders are also urged to support the idea of an additional share issue in order to pay
the tax demands. It was learned yesterday that shareholders are prepared to show concern for their company's fate
and to channel their money into repaying its debts.
It is possible that the more than 3bn dollars in Swiss bank accounts will be used for this purpose - these accounts
belonging to Yukos shareholders, which were impounded in March at the request of Russian law-enforcement agencies, were
recently unblocked by decision of the Swiss higher federal court. Thus Western judicial organs indicated that they
regard the "Yukos case" as purely political and have no intention of helping the Russian authorities persecute
the company.
Officials are now almost openly admitting that it is virtually impossible to stop the "Yukos case" at the
present stage. Moreover, from incautious remarks by certain representatives of the government and interested companies
it is possible to conclude that Yukos and its owners have fallen victim to an ordinary redivision of property. This may
be the reason why there has been no answer from the White House to Simon Kukes' letters and proposals. The only
person who still claims to believe that Yukos will avoid bankruptcy is Finance Minister Aleksey Kudrin, and that is
probably because he lacks experience of real work in business.
According to Nezavisimaya Gazeta's information, businessman Boris Jordan, who proclaimed his readiness to act as
a mediator between Yukos and the authorities, has discussed the company's fate with high-ranking Presidential Staff
officials who do not belong to the camp of the Kremlin "siloviki" [power-wielding staff] and received the
go-ahead for the "takeover" of Yukos. The wheels are in motion - there is not long to wait.
[Nezavisimaya Gazeta] |
RUSSIA IN FACTS
