Yukos warns it will declare bankruptcy if prize asset is sold

Embattled Russian oil giant Yukos oil giant is warning it will declare bankruptcy if the government sells its prize asset to cover a multi-billion-dollar tax bill.

"The company management is currently making every effort to raise additional funds in order to repay, as soon as possible, the tax liability and finance current operations," Yukos said in a statement.

"However, should those efforts prove unsuccessful and Yukanskneftegas is sold ... the management of the company would be compelled to announce the bankruptcy of Russia's largest oil company."

Yukos shares crashed 11.6 percent on the benchmark RTS index within minutes of the announcement.

On Tuesday, Russian authorities said they intended to sell Yukanskneftegaz, a subsidiary that produces 62 percent of the firm's oil and holds 58 percent of its reserves.

The sale of the subsidiary is aimed at paying 3.4 billion dollars (2.8 billion euros) in underpaid taxes that the government has filed against Yukos for 2000.

Analysts value Yukanskneftegaz at at around 15 billion dollars and Yukos this week released a valuation that said the subsidiary's reserves were worth 30.4 billion dollars.

The oil giant, which accounts for some 20 percent of Russia's oil production, has not been able to pay the tax bill because of a court-ordered freeze on its accounts and assets.

It has repeatedly offered to negotiate a restructuring of the debt with the government, to no avail.

Observers say the troubles of the firm are linked to those of its founder Mikhail Khodorkovsky who is standing trial on fraud and tax evasion charges.

Many see the case against the tycoon and his firm as Kremlin payback for the billionaire's political ambitions. Authorities say they are simply fighting corruption.


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