Tyumen Oil Withdraws Bond Sale Following PWC Revoke

The Tyumen Oil Company, Russia's third largest producer of oil, withdrew half a billion dollars of Eurobonds sold a week ago after the auditor PricewaterhouseCoopers revoked its approval of the company's financial report.

The world's largest accounting firm said that it canceled its “unqualified audit opinion” on Tyumen's 2001 report because some of the oil producer's assets should have been valued according to their purchase price rather than their book value.

“This is an unprecedented situation,” said Iosif Bakaleinik, Tyumen's chief financial officer, in a telephone interview. “This withdrawal won't hurt our financial operations but it will hurt our reputation.”

The cancellation may damp appetite for Russian bonds just as domestic borrowers tap capital markets for the first time since the country defaulted on forty billion dollars of Treasury debt in 1998. Russia's government plans to sell as much as two billion dollars of Eurobonds during 2002, while companies and city governments may sell another three billion dollars worth.

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