Yukos bankruptcy decided?

Foreigners that hold 7 out of the eleven seats in the Yukos board of directors think the management must announce voluntary bankruptcy the very day when the authorities report sale of Yuganskneftegas. The Vedomosti newspaper reports, Yukos Senior Vice-President Alexander Temerko verified the information.

Meanwhile, head of the Yukos press-service Alexander Shadrin says the management will try to avoid bankruptcy. According to the Yukos Charter, it is the executive committee only that can appeal to the Court of Arbitration for a bankruptcy suit; and the board of directors cannot make the committee do so.

The RF Ministry of Justice officials believe the executive committee would not agree with the foreign directors and suspect them of deliberate bankruptcy. The RF Administrative and Criminal Codes provide that false or deliberate bankruptcy must entail penitentiary punishment or the prohibition to hold executive positions in the future. On the other hand, Managing Director with A.S.T. legal company Anatoly Yushin says the above mentioned norms are seldom applied in practice. What is more, the Court of Arbitration may turn down an appeal for bankruptcy even if Yukos appeals for it.

A mechanism for rescue of some of Yukos assets was schemed a year ago when the company suffered its first troubles. Some sources report, Yukos basic shareholders followed the popular plan: owners of the company borrowed large sums of money in banks under the company’s control. They did it to further announce that the company defaulted on loans in case of danger. After that, they would bankrupt the company and recover the mortgaged property.

The plan started in September 2003 when Yukos and its rival Sibneft decided to merge and thus make the world’s fourth largest private oil company. Yukos needed a $1 billion loan. A syndicate of banks controlled by France’s Societe Generale received a contract for giving the loan. In several weeks, Yukos appealed immediately to Societe Generale for another loan at the rate of $1.6 billion. Experts did not like that the infamous bank would credit Yukos: several sources reported the bank was involved in criminal cases on money laundering.

There were apprehensions that the French bank would not stand the burden of granting the loan. However, when Switzerland’s UBS bank, one of Russia's MENATEP basic partners, guaranteed 100 per cent payment of the loan Societe Generale finally agreed to give the loan. Later, Societe Generale got rid of the burden and some other institution shouldered it instead of it. Analysts suppose the bank pool coordinated by Societe Generale and the Yukos management reached an agreement on probable actions in case the Russian authorities get tougher. Yukos spokesperson Alexander Shadrin implied in an interview to the Izvestia newspaper that the $1.6 billion loan was organized by MENATEP. 

The scheme was put into practice step by step. In July, creditor banks reported the first default on the loan at the rate of $1 billion; that gave rise to rumors on coming bankruptcy of Yukos through the loan organized by MENATEP. In a month, the oil company got another notice from creditor banks to the sum of $1.6 billion. That gave the creditor banks the right to charge off money from the company's accounts.

The Finansovye Izvestia newspaper reported that the loan was given on security of export oil supplies and property of Yukos’s oil producing subdivisions, Yuganskneftegas, Samaraneftegas and Tomskneft-VNK. The creditors enjoy the right of priority for recovery of the property in case the oil company fails its payment obligations. This is probably the way Yukos foreign directors want to follow when they know the government wants to sell Yuganskneftegas for a quarter of its actual price.

Head of the consulting and analytical department with the Interfin-Trade financial company Khalil Shekhmametyev told PRAVDA.Ru journalists the oil company is very likely to be announced bankrupt. He says, according to the legislation companies with negative net wealth are to be declared bankrupt. So, as soon as Yuganskneftegas is sold Yukos may be declared bankrupt. The analyst supposes that according to the law on bankruptcy Yukos directors may protest all deals arranged within the past six months, the prospective Yuganskneftegas sale including. It is not ruled out that as a result of the bankruptcy proceedings the oil company may be handed over to structures not connected with Mikhail Khodorkovsky and MENATEP.

Khalil Shekhmametyev would not insist the government wants to bankrupt Yukos. “I think, in this case the authorities do not know how to conclude their game. They want but cannot find a satisfactory solution.”

The bankruptcy rumors and the initiative of selling Yuganskneftegas to pay off Yukos debts sprang up together and accompany each other now. The situation may get clearer at the end of November when terms of Yuganskneftegas auction are to be determined. Many analysts suppose the Yuganskneftegas shares may be still on a steady decline down to $1.75 billion (the price named by Bank of Moscow experts in July). This will make Yukos shareholders even more resolute to bankrupt the oil company. 

Artyom Sergeyev

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Author`s name Dmitry Sudakov