Russian Oil Company About To Go Bankrupt

[Armelius]

Also Monday, besieged Russian oil giant Yukos came a step closer to bankruptcy after a group of Western banks signaled they might call in a $1 billion loan to the company. Societe Generale, the lead-arrangers for the lenders' syndicate, said the banks don't want to "jeopardize" the besieged company, but the notice issued Monday means the banks can call in their debt at any time.

Yukos has been ordered to pay a 99.4-billion-ruble ($3.4 billion) back taxes bill by Thursday. Its bank accounts were ordered frozen last week and a freeze on its assets remains in place, giving the company no way to raise money to pay the bill.

The company's former chief executive Mikhail Khodorkovsky remains jailed on tax evasion charges and faces trial later this year. His supporters claim he is being prosecuted because of his support of opposition political parties.

With a daily output of about 1.72 million barrels, or nearly one in every five that Russia extracts, Yukos is the country's largest in terms of production. There are fears that its disintegration could tarnish Russia's image abroad and slow growth in the oil sector - the country's main cash earner.

[carmenlittle]

Originally posted by Armelius
Also Monday, besieged Russian oil giant Yukos came a step closer to bankruptcy after a group of Western banks signaled they might call in a $1 billion loan to the company. Societe Generale, the lead-arrangers for the lenders' syndicate, said the banks don't want to "jeopardize" the besieged company, but the notice issued Monday means the banks can call in their debt at any time.

Yukos has been ordered to pay a 99.4-billion-ruble ($3.4 billion) back taxes bill by Thursday. Its bank accounts were ordered frozen last week and a freeze on its assets remains in place, giving the company no way to raise money to pay the bill.

The company's former chief executive Mikhail Khodorkovsky remains jailed on tax evasion charges and faces trial later this year. His supporters claim he is being prosecuted because of his support of opposition political parties.

With a daily output of about 1.72 million barrels, or nearly one in every five that Russia extracts, Yukos is the country's largest in terms of production. There are fears that its disintegration could tarnish Russia's image abroad and slow growth in the oil sector - the country's main cash earner.

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[Tugay-bey]

Investors offer bail out to save YUKO


A British-based consortium of private investors offered on Thursday to pay the tax bill of Russian oil giant Yukos and to bail out its largest shareholder, jailed magnate Mikhail Khodorkovsky, in exchange for his stake.




YUKOS, Russia's biggest oil producer, facing foreclosure on its huge tax bill and sale of its key production unit, said earlier it could be driven into bankruptcy within a month and major export contracts disrupted.

"The financial interests are prepared to pay off the debts of YUKOS and if necessary simultaneously pay off the material damages claimed against Mr Khodorkovsky," the consortium said in a letter sent to Russian President Vladimir Putin, a copy of which was seen by Reuters. Putin's office declined comment.

Little is known about the consortium and there was no way to judge how realistic the offer was.

"They have enough money. It's a very serious offer," said consortium spokesman Charles Stewart-Smith. But he declined to say how many investors were in the group or how they could raise the huge funds needed to back the deal.

YUKOS faces back tax demands of $3.4 billion, a bill that could eventually climb to $10 billion. Its assets have been frozen and its core unit put up for sale. Foreign banks were holding off from demanding $1 billion they are owed.

Khodorkovsky, who controls over 40 percent of YUKOS, is standing trial on charges of fraud and tax evasion. He faces a long prison term if found guilty in a tussle described by many analysts as Kremlin retribution for his political ambitions.

YUKOS Chief Executive Steven Theede said restrictions on its assets meant the firm was simply not able to pay the tax bill. "We will essentially run out of cash and not be able to fund our business operating expenses and obligations some time in the first half of August," Theede told a news conference called amid speculation YUKOS might file for bankruptcy.

Bailiffs enforcing payment of the tax debt are preparing to sell Yuganskneftegaz, YUKOS's Siberian unit accounting for 60 percent of its daily output of 1.7 million barrels. YUKOS values Yuganskneftegaz at over $30 billion. But Theede said "We cannot expect to get any change" from the sale after the tax debt for 2000 is settled.

YUKOS, last year Russia's most valuable listed company, said it would no longer be a viable business if deprived of Yugansk. With YUKOS exporting 75 percent of output, the loss could scupper long-term deals with overseas shippers and importers.

The company's warning contributed to a jump in U.S. oil prices, catapulting light crude back above $41 a barrel. YUKOS produces around as much as OPEC member Algeria. Consortium spokesman Stewart-Smith said its main player was Konstantin Kagalovsky, a former YUKOS minority shareholder now living in Britain, and the letter to Putin was signed by George Miller, a Chilean-born businessman of Russian extraction.

The spokesman noted that none of the investors was resident in Russia. YUKOS shares sank as low as $5.00 on Moscow's RTS exchange on the warning, their lowest level since Christmas Day, 2001. On the rouble-denominated MICEX exchange, they plummeted 13.5 percent before recovering to 153.47 roubles, down 9.72 percent.

The plunge followed last October's arrest of Khodorkovsky, once Russia's wealthiest man, whose lobbying in parliament is believed to have angered Putin. It is also seen as a state attempt to reassert control over strategic companies sold cheaply in 1990s privatisations. YUKOS management said the government had made no reply to offers to settle the row and save the company. Surgutneftegaz, an oil firm with Kremlin ties, is Yugansk's most likely buyer.

"I think bankruptcy looks more or less certain because we are not seeing any signs of willingness to negotiate," said Zarko Stefanovski, senior oil and gas analyst at Aton brokerage in Moscow.
23 ÈÞËß 11:22,Reuters