- Title: RUSSIA: OIL GIANT YUKOS FILES FOR BANKRUPTCY TO AVOID KEY ASSET SALE
- Date: 16th December 2004
- Summary: (EU) MOSCOW, RUSSIA (FILE - NOVEMBER 2004) (REUTERS) 1. LAS TILT DOWN EXTERIORS OF THE YUKOS HEADQUARTERS IN MOSCOW 0.21 (EU) MOSCOW, RUSSIA (DECEMBER 15, 2004) (REUTERS) 2. HAS INTERIORS OF THE MICEX EXCHANGE IN MOSCOW WHERE TWICE ON WEDNESDAY TRADING OF SHARES IN YUKOS WERE SUSPENDED (5 SHOTS) 0.53 3. SLV EXTERIORS OF TROIKA DIALOG INVESTMENT BANK IN MOSCOW 1.00 4. MV INTERIORS OF TROIKA DIALOG SHARE TRADING FLOOR/ TRADERS AT DESKS/ TRADING SCREENS (2 SHOTS) 1.13 5. (SOUNDBITE) (English) JAMES FENKNER, AN INVESTMENT STRATEGIST AT TROIKA DIALOG SAYING: "Today was the announcement of bankruptcy proceedings or the hope for bankruptcy proceedings in the U.S.; yesterday we saw full page articles in a number of the major newspapers under the title "Buyer Beware!" for any buyer who would buy Yuganskneftegaz assets. This is a publicity stunt, much more than the market takes it as a fundamental change. The issue with YUKOS and Yuganskneftegaz has always been determined out of the Kremlin and that is not changing. Again, we will see an auction, very likely this Sunday, and we expect a company like Gazprom, as the most likely winner." 1.59 6. MV TRADING FLOOR AT TROIKA DIALOG 2.11 (EU) NEFTEYUGANSK, SIBERIA, RUSSIA (FILE - SEPTEMBER 2004) (REUTERS) 7. SLV YUKOS'S MAIN OPERATING UNIT, YUGANSKNEFTEGAZ/ OIL PUMPS IN OPERATION 2.30 8. MV EMPLOYEE AT YUGANSKNEFTEGAZ OPERATING VALVE AT OIL PUMPING SITE 2.37 9. SLV NEFTEYUGANSK SIGN IN FIELD 2.41 10. WIDE EXTERIOR OF YUKOS OFFICES IN NEFTEYUGANSK 2.51 GRAPHICS (DECEMBER 15, 2004) (REUTERS) 11. SCU YUKOS SHARE PRICE FALLING 2.58 Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 31st December 2004 12:00
- Keywords:
- Location: MOSCOW, RUSSIA AND NEFTEYUGANSK, SIBERIA, RUSSIA
- Country: Russia
- Reuters ID: LVAE6CUJG68XOD0I6CG4XH45DTBF
- Story Text: YUKOS files for bankruptcy to avoid key asset sale.
Russian oil group YUKOS has filed for bankruptcy
protection in a U.S. court in an attempt to stop the
Russian government from auctioning off its main production
unit on December 19, it said on Wednesday (December 15, 2004).
YUKOS has also asked the Houston court, which convenes
later on Wednesday, to order Russia to arbitration, so that
it can press claims for billions of dollars in damages over
"an unprecedented campaign of illegal, discriminatory and
disproportionate" tax claims.
The Russian authorities intend on Sunday to auction off
Yuganskneftegaz, the crown jewel of fallen oligarch Mikhail
Khodorkovsky's business empire, in their pursuit of
back-tax claims against YUKOS of $27 billion. The auction
is due to have a starting price of $9 billion,
Khodorkovsky is on trial for fraud and tax evasion in
what many people see as the Kremlin's punishment for
breaking a pledge by Russia's super-rich business elite to
President Vladimir Putin to stay out of politics.
"The steps we took today were done as a last resort to
preserve the rights of our shareholders, employees and
customers," YUKOS Chief Executive Steven Theede said in a
statement. "Unfortunately, we believe it is the only resort left."
Russia's State Property Fund said preparations for
Sunday's auction were going ahead as planned.
State-controlled gas monopoly Gazprom is expected to win
the contest and is lining up record financing for its bid.
"Our plans are unchanged because we evaluated all
possible risks when we decided to bid for Yugansk," said
Alexander Stepanenko, a spokesman for Gazprom's oil unit
Gazpromneft.
But a Texas court was due to hold an emergency hearing
on the YUKOS filing at 11.15 a.m. local time (1715 GMT),
according to court documents posted on the Internet.
A source familiar with YUKOS's filing said a ruling
under U.S. Chapter 11 bankruptcy proceedings on whether to
approve or deny a worldwide restraining order on the
Yugansk sale could be made on Wednesday.
But lawyers -- and even its main shareholder -- were
unsure that the gambit would even win YUKOS a stay of
execution. Three of YUKOS's independent directors quit on
Wednesday, suggesting a possible board rift over the
bankruptcy filing.
YUKOS said it filed for Chapter 11 protection from
creditors and requested an emergency hearing in the U.S.
Bankruptcy Court for the Southern District of Texas,
Houston Division.
The filing, obtained by Reuters, states that YUKOS's
current assets total $12.3 billion while its debts are
$30.8 billion.
YUKOS argues that U.S. bankruptcy law has worldwide
jurisdiction as it has major business dealings in Texas and
Chief Financial Officer Bruce Misamore, who signed the
bankruptcy filing, is now based there.
The last-ditch bid to stave off the breakup of Russia's
top oil exporting company won qualified backing from
Khodorkovsky's holding company, Menatep.
The source familiar with the filing forecast two
scenarios if the Houston court grants the restraining
order: either the Russian authorities will ignore it, or
they and the auction bidders will petition the court to
overturn it.
If the court upholds the order, then bidders for
Yugansk and their financiers could be sued in the U.S.
courts to prevent the sale from completing, the source
added.
"The Chapter 11 filing could faze the bidders. They may
get nervous. It's upping the stakes," the source told
Reuters.
One international bankruptcy lawyer was more sceptical:
"I don't think they have a chance of freezing the asset
sale process," the lawyer said. "If YUKOS tried to freeze
that process then the Russian government would step in, for
example to nationalise the company."
Chapter 11, designed to give companies breathing space
to reorganise, would only be appropriate if YUKOS's
creditors were mainly based in the United States, not
Russia, the lawyer added.
An investment strategist at the Troika Dialog
Investment bank in Moscow described YUKOS's move to file
for bankruptcy in the United States as a publicity stunt.
"Today was the announcement of bankruptcy proceedings
or the hope for bankruptcy proceedings in the U.S.;
yesterday we saw full page articles in a number of the
major newspapers under the title "Buyer Beware!" for any
buyer who would buy Yuganskneftegaz assets. This is a
publicity stunt, much more than the market takes it as a
fundamental change. The issue with YUKOS and
Yuganskneftegaz has always been determined out of the
Kremlin and that is not changing. Again, we will see an
auction, very likely this Sunday, and we expect a company
like Gazprom, as the most likely winner," said Troika
Dialog's James Fenkner.
YUKOS's petition seeks to restrain the Russian
government, auction bidders and financiers from
participating in the sale of Yugansk, which pumps 60
percent of YUKOS's 1.7 million barrels per day of oil.
Uncertainty over the auction's outcome has led YUKOS --
which pumps nearly a fifth of Russia's oil -- to be dropped
from Russia's oil export schedules, stoking market concerns
over possible supply disruptions.
Meanwhile Gazprom, the only declared bidder, is
syndicating Russia's largest ever loan facility of around
10 billion euros via ABN Amro, BNP Paribas, Calyon,
Deutsche Bank, Dresdner Kleinwort Wasserstein and J.P.
Morgan. Once Russia's largest listed firm, YUKOS is now worth
less than $2 billion, down from a peak of over $40 billion
last year.
Its shares slumped another 12 percent on Wednesday to
20.65 roubles ($0.74), their lowest since July 2000,
triggering two one-hour suspensions of trade by Moscow's
MICEX exchange.
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