Yukos Affair Grabs the Headlines Again

By Alla Zubkova The Moscow News
Last week the embattled Yukos Oil Company once again grabbed the headlines with a number of announcements from its management, its auditor and by Russia's President Putin himself. Yukos tried to dispel the shareholders' worries about its imminent bankruptcy, appealing to Putin's earlier statement that the government doesn't want to see the company ruined. Putin, in his turn, tried to dispel the investors' worries, and said that the state doesn't want to nationalize Yukos. The market analysts, however, didn't take the President's words too seriously
On Thursday, September 23, the Board of Directors of Yukos convened to discuss the company's future and its "divorce" with Sibneft Oil Company, which by now is considered a decided matter. Speaking before the meeting, Viktor Gerashchenko, the Board's Chairman, told reporters that Yukos has nothing against the de-merger with Sibneft as long as "everyone is left with acquired property" after the process is over. He also hinted that Sibneft, which is owned by Roman Abramovich (who so far has been able to keep a peaceful balance of powers with the Russian authorities), has promised to help Yukos solve its own problems in case of a peaceful and swift de-merger process. "There is the court's decision that we have to return 57% of Sibneft's shares," Gerashchenko said. "We could delay the transfer of shares for two months. But since Sibneft has promised us assistance in our negotiations with the authorities, and will provide us with time when we can exist peacefully, why would we procrastinate for two months?".
The meeting of the Board adjourned with a request to the company's management that it does everything in its powers to stave off a bankruptcy. Viktor Gerashchenko told reporters following the meeting: "We are acting from a conviction that our President [Vladimir Putin] does not engage in idle talk, and that his statement that it is not in the state's interest to see Yukos bankrupt authorizes us not to declare bankruptcy." Earlier Gerashchenko already expressed an opinion that Putin is constantly misinformed about the state of affairs at Yukos and that all of the decisions regarding the government's position on the issue are made by people below him. Yukos' Chairman also added that the Board decided that "the management should act in the proper way, ensure survival of the company, meet contractual obligations and pay taxes".

Another big piece of news that emerged on Thursday was the report leaked to the media from Dresdner Kleinwort Wasserstein audit company, which has been hired by the Russian authorities to evaluate Yukos' main production asset, Yugansk-neftegas, before its proposed sale at auction. The money received from the sale of Yugansk is to be used for making Yukos' payments of back taxes, which already amount to $7.5 billion. So far the company has been able to pay approximately $2.5 billion of this sum, but the payment process is seriously hampered by the fact that court bailiffs had arrested all of Yukos' accounts. According to the results of the independent evaluation of Yuganskneftegaz, which appeared in the press, the company is valued between $15 billion and $17 billion. This is much higher than the price tag previously placed on Yugansk by the Russian authorities. As a result, the Justice Ministry circulated a report which declined to comment on the result of valuation done by Dresdner Kleinwort. The market analysts, meanwhile, once again began to ponder the possibility that the authorities will simply recall Yugansk's production licenses in order to considerably lower its market value.

On Friday, September 24, the Russian President gave a large press conference at the Congress of World news agencies, organized by Itar-Tass. For the first time since June, when he said that "the Russian authorities and the Russian government are not interested in the bankruptcy of such a company as Yukos" Putin made public remarks regarding the fate of the embattled oil company. The President rejected all accusations that the government wants to nationalize Yukos and said: "The state did not strive then and does not strive now to seize the assets of Yukos. We have no such goal." He was quick to note, however, that "if in the future the assets of this company will go up for sale, state-owned companies may take part in the process". Realizing that his words may be interpreted "incorrectly" in light of the recent merger between the state-owned Rosneft and the natural gas monopoly Gazprom, Putin added: "However, such a goal [seizing Yukos' assets] never was and never will be set."

Such a statement by President Putin can be interpreted in at least two different ways. The optimists would say that the President, whose closest circle has been split by the Yukos affair, has finally chosen the side of market reformers headed by Economy Minister German Gref and Finance Minister Alexei Kudrin. They oppose the forcible nationalization of the oil company that is advocated by such representatives of siloviki faction as Igor Sechin.

The pessimists would say that Putin's statement is no more than beautiful words, and that the real information is contained in his Freudian slip when he said that state-owned companies would no doubt take part in selling out Yukos' assets.

The most illustrative was the reaction of the Russian stock market. Following the President's statement the price of Yukos shares grew by six percent, but soon afterwards the market analysts decided that Putin's words should be taken with a grain of salt, and the price of shares fell back by four percent. All of the market parti-cipants agree that President Putin's statement is mostly export-oriented, aimed to soothe the possible investors of their worries about a severe crack-down on economic freedoms. The real litmus test for the authorities will be the official announcement of results of Yugansk-neftegaz's evaluation and the government's subsequent actions. If the state keeps its word and puts Yugansk (or part of its shares) up for an auction at a price determined by the independent auditor, then President Putin's words can be considered an honest statement. If the officials find a way to considerably lower the price announced by Dresdner Kleinwort and, moreover, sell Yugansk to the newly created Gazprom-Rosneft giant, then Putin was simply buying more time.

(From : Moscow News)