Yukos Receives Default Notice

Russia's beleaguered Yukos oil company received a default notice for a $1.6 billion loan, and reports said Group Menatep, the holding company through which former Yukos CEO Mikhail Khodorkovsky and his associates control the company, was the creditor.

The notice of default doesn't automatically mean that the lender is calling for immediate repayment of the loan. Some analysts had predicted, however, that Menatep might use this loan as a way to force the company into bankruptcy, which would then give its owners - as key lenders - more control over how the assets were sold off.

The Interfax news agency reported that a division of Menatep was the creditor.

Last month, a group of Western lenders, led by Societe Generale, issued notification that they could call in a $1 billion loan to Yukos, but the banks emphasized that they had no plans to immediately demand repayment.

Yukos is facing a $3.4 billion tax debt for 2000, part of a series of tax claims and court cases widely seen as Kremlin retribution for the growing clout of Khodorkovsky - now on trial on charges including fraud and tax evasion.

Also Wednesday, Russian energy officials said they have asked government bailiffs to give Yukos access to its frozen bank accounts, saying oil production and exports from the country could be substantially cut if the company is forced to halt output.

Sergei Oganesyan, head of the Federal Energy Agency, said Wednesday that a drop in production from Yukos - Russia's largest oil producer - could be detrimental to the country as a whole.

"It's very possible that Yukos will have to halt output. It's impossible for a company to produce oil without financing," Dow Jones Newswires quoted Oganesyan as saying.

Bailiffs have frozen Yukos accounts as they move to collect on the company's back tax debt.

Yukos executives have repeatedly said they will have to scale back output if bailiffs don't give the company access to cash.

"If a company can't pay for customs, transport or equipment, it will have to stop well flow," Dow Jones quoted Oganesyan as saying. "Our goal is to prevent this from happening. There are a lot of social consequences that could happen in the event of such a collapse."

Energy and Industry Ministry spokesman Yan Pekhonen confirmed the request had been made. Oganesyan's agency is an executive body of the ministry.

Oganesyan said the Russian government needs to decide what it wants to do with Yukos by the end of August. If the company cannot make transport and customs prepayments for September, the flow of oil could slow already this month.

Yukos pumps 1.7 million barrels a day, or 2 percent of world oil production.

A series of contradictory statements and rulings involving Yukos in the past several weeks has sent its share prices on a roller coaster ride and helped drive world oil prices to record highs.

Last week, Yukos said that the bailiffs had given it access to its frozen accounts to pay for ongoing operations, but the Justice Ministry said the next day that the decision was illegal and rescinded it.


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