Yukos Receives Notification of Default

Russia's beleaguered Yukos oil company received notification of a default on a $1 billion credit, the company said Monday, pushing it a big step closer toward bankruptcy.

The notification came from a syndicate of banks, led by Societe Generale, that had lent Yukos the money in September, the company said. Alexander Shadrin, the company spokesman, told the Interfax news agency that the company got the notification on Friday evening demanding that it quickly clear the debt.

Yukos, Russia's biggest oil producer with output at about 1.72 million barrels a day, is facing a $3.4 billion back-taxes claim, which it has warned it cannot pay unless a court order preventing it from selling its assets is lifted.

Pressure intensified on Yukos last week when a court upheld the 2000 tax claim against it and bailiffs notified the company that it had until Wednesday evening to voluntarily pay the bill. Bank accounts of NK Yukos, a holding vehicle for the company's production assets, were frozen as collateral against the bill.

Russian media also reported that the Tax Service wants another $3 billion in back taxes for 2001.

With pressure intensifying, Yukos' future is looking increasingly dim. Its ruin could tarnish Russia's image abroad and slow growth in the oil sector — the country's main cash earner and an industry that bolsters President Vladimir Putin's international clout.

For the past year, Yukos has been the focus of a complex probe that many analysts see as a Kremlin-driven effort to punish its former CEO Mikhail Khodorkovsky for funding opposition parties and to stifle his purported political ambitions.

Putin said last month that the government isn't interested in seeing Yukos driven into bankruptcy. But analysts have speculated that the company's only chance for survival is if Khodorkovsky and the other key shareholders relinquish their shares in the company.

Khodorkovsky and his associate, Platon Lebedev are in jail, facing charges of fraud and tax evasion. Many believe that the outcome of their case will depend on their willingness to make a deal with the government over control of Yukos, which had been one of Russia's most strategically important companies.

Shadrin said that Yukos has not received any default notices from its other lenders, which include Menatep, the holding company through which Khodorkovsky and associates control the company. Menatep has lent Yukos US$1.6 billion.

Meanwhile, some Yukos minority shareholders filed a lawsuit in New York against Yukos, Group Menatep, Khodorkovsky, Lebedev and other key Yukos shareholders, Russia's Vedomosti business newspaper reported Monday.

The lawsuit accuses the company and its principal owners of creating a fraudulent scheme that led most of the company's smaller shareholders to buy their stock at inflated prices, Vedomosti said. The lawsuit covers those minority shareholders who bought stock in the eight months before Khodorkovsky's October arrest.

Since the probe against Yukos began, the company has lost about half its market value.


HERE