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Tue, Jul 06, 2004 - Page 12 News List

Creditor banks declare oil giant Yukos in default


Russian oil giant Yukos, its main owner on trial and facing a huge tax bill that could drive it into bankruptcy, said yesterday that a group of creditor banks had declared it in default.

The pressure on Yukos is widely seen as orchestrated by the Kremlin which wanted to snuff out the political ambitions of key shareholder Mikhail Khodorkovsky who is on trial for fraud and tax evasion.

"On July 2, we received the default notice from the banks which helped us organize the US$1 billion loan," Yukos's spokesman Alexander Shadrin said.

The news pushed Yukos shares sharply lower again yesterday.

One of Russia's leading brokerages, UFG, said it was suspending ratings and financial forecasts for Yukos after the latest events.

The default announcement came hard on the heels of an eight hour raid on Yukos's Moscow headquarters on Saturday, during which tax police seized documents, computer discs and safes, and days before a deadline for payment of a US$3.4 billion tax bill the firm says it cannot meet.

Saturday's raid on the Yukos headquarters was the latest legal swoop on the firm's offices, but one which analysts said could further dent the share price.

"This will negatively influence the operation activities of Yukos and arouse serious discontent among the company's minority shareholders, including foreign shareholders, and may lead to an even sharper fall in the company's share price," said Sergei Suverov, analyst at Zenit Bank.

The Vedomosti newspaper said yesterday a group of Yukos's minority shareholders were suing the firm's managers, owners and auditors, PricewaterhouseCoopers. It said law firm Lerach Coughlin Stoia & Robbins had filed the suit in New York on Friday.

US Ambassador to Russia Alexander Vershbow said on Sunday there was an obvious political element to the Yukos and Khodorkovsky cases.

"But we just hope that a fair verdict is given," Vershbow said.

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