Russia to sell part of Yukos's core asset

MOSCOW (AFP) - Russia announced plans to break up Yukos in a crippling blow to Russia's largest oil producer and its billionaire founder who dared to challenge President Vladimir Putin's rule.A justice ministry spokeswoman said the state had decided to strip Yukos of a part of its crown jewel -- Yuganskneftegas, which accounts for 62 percent of production -- for the company's slow payment of back taxes.
Yukos shares fell more than 15 percent on the main dollar-denominated RTS index within minutes of the news and closed 4.5 percent lower at 4.9 dollars.
"Right now, our experts our trying to translate the justice ministry statement into simple Russian, because we cannot make sense from the text issued by this esteemed ministry," Yukos spokesman Alexander Shadrin was quoted as saying by the news agency Interfax.
The justice ministry said it had received an independent assessment that estimated the value of Yuganskneftegas at 10.4 billion dollars (8.5 billion euros) -- far below initial valuation figures reported by the Russian press.
Russian news reports last month said that Dresdner Kleinwort Wasserstein had valued Yugansk at between 15.7 and 17.4 billion dollars -- a fair value according to analysts' estimates -- and the bank refused to confirm the justice ministry's valuation.
However one banking source said the 10.4 billion dollar figure was "taken out of context" while the Gazeta.ru Internet site reported that Dresdner had asked the justice ministry to publish its valuation report in full.
A Russian state property fund spokesman said the stake would be sold through either a tender or auction.
"If everything goes according to plan, the deal will be made by the end of November," property fund spokesman Vladimir Zelentsov said.
A Yukos lawyer said the company had no legal right to appeal the justice ministry's decision.
Yukos's assets are still frozen and the company was unlikely to re-emerge whole after being saddled with a multi-billion-dollar tax debt that it cannot pay without access to its bank accounts.
The tax charges emerged only after company founder Mikhail Khodorkovsky -- now in jail -- expressed open political opposition to Putin last year.
After forming the first oil giant that was transparent enough to meet Western accounting standards, Khodorkovsky tried -- but failed -- to stack parliament with allies in an effort to weigh in on Russia's future economic course.
His policies quickly clashed with those of a separate team of other Putin insiders, who backed some of Khodorkovsky's oil rivals.
In past weeks, Yukos's fate has hung on the Western valuation of Yugansk since a large price would seemingly put it out of reach of any single Kremlin-linked oil company.
That price would leave the justice ministry with the only option of selling off Yugansk in pieces.
"One can explain the low valuation by all the uncertainty surrounding Yuganskneftegas," said Gennady Shmal, president of the Russian oil and energy industry union.
"Also, there is still a risk that Yuganskneftegas may lose its production license" over the non-payment of back taxes, Shmal told ITAR-TASS.
Justice ministry official Alexander Buksman was quoted as saying by Interfax that the state intended to sell a share of Yuganskneftegas that would be large enough to cover the outstanding debts.
But this figure is vague at best since Yukos faces separate tax bills and penalties for both the company and its affiliates for the years 2000 and 2001. Authorities reported Tuesday they have opened probes for the following two years as well.
"This latest news suggests that the state... has moved directly to match the valuation with the likely tax bill," said Chris Weafer, chief analyst at the Alfa Capital investment bank.
"This means that Yuganskneftegas can be sold directly to whomever the state prefers rather than going through the auction process."

(From Yahoo Finances)