YUKOS Shares Tumble After Unit Seized

Shares in Russian oil major YUKOS plunged on Tuesday after bailiffs seized its shares in main production unit Yuganskneftegaz for the second time, signaling the state's resolve to dismantle the oil company.

Justice Ministry officials, collecting a $3.4-billion-tax debt for 2000, said late on Monday they had frozen shares in the oil-producing subsidiary despite a court decision on Friday ruled that an earlier seizure of the unit was illegal.

Bailiffs earlier said they had a plan to sell it.

At 5:38 a.m. EDT YUKOS shares were trading 13.23 percent lower at 110.20 roubles on Moscow's MICEX exchange, slightly stronger after they were suspended from trade for an hour. YUKOS's volatile shares have regularly been suspended in recent weeks.

"The news is obviously negative as it renews fears of massive asset losses," Troika Dialog said in a research note.

"We are particularly disappointed with the way that the government is handling the news flow on the company. Branches of power are being played against one other, making the whole process a joke, the stock market a casino and analysts' work a nightmare."

The statement came as a shock to investors and analysts as it appeared to say bailiffs had re-seized Yukos' shares in Yuganskneftegaz almost immediately after the Friday court ruling. That ruling sparked a 17 percent gain in YUKOS stock on Monday.

"The statement said that they did this on Friday which begs the question as to why they delayed such a price-sensitive piece of news until after the stock markets closed on Monday?" Alfa-Bank strategist Chris Weafer said in a research note released overnight.

Further multi-billion dollar tax claims could lead to the sell-off of production assets or their transfer into the hands of a state company such as state oil company Rosneft or gas monopoly Gazprom.

Weafer in his research note suggested the possibility of a YUKOS share issue in favor of the government followed by a reverse takeover of, for example, the smaller Rosneft.

The campaign against YUKOS is widely seen as punishment for its founder Mikhail Khodorkovsky's political ambitions.

As the government looks into YUKOS's tax payments for the years after 2000 additional tax claims could be made -- as much as $10 billion in total or whatever the government needs to claim control of YUKOS's oil production, analysts have said.

Bailiffs have already frozen YUKOS-owned shares in three subsidiaries that make up about 95 percent of YUKOS's oil production, although oil continues to flow.

They can only seize key production assets for debts as a last resort, analysts say. But bailiffs said they were merely seizing the shares, not "tools, equipment and the like."




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