A court ruling expected tomorrow on bankruptcy for Yukos could seal the end of Russia's former top oil producer after an unprecedented judicial campaign, as state energy giants prepare to swoop on the company's assets.
There appears to be little chance of saving the group now, after a Russian court-appointed administrator told a creditors meeting last week that Yukos should be declared bankrupt.
The company's heyday came under founder Mikhail Khodorkovsky, once Russia's richest man, who is now serving an eight-year prison sentence for financial crimes in a Siberian prison camp.
Yukos became so powerful from the late 1990s that it virtually ruled swathes of western Siberia and was planning to build its own oil pipeline to China. Khodorkovsky was a darling of Western business elites.
Then in 2003, Yukos was hit with massive back tax bills and a vast judicial inquiry seen by critics as a Kremlin-orchestrated campaign to wrest back state control of key energy assets and neutralize Khodorkovsky as a potential political opponent.
Last week, administrator Eduard Rebgun told creditors that Yukos debts were higher than the company's assets and that Yukos should therefore be declared bankrupt.
DISAGREEMENT
The creditors, mainly made up of Russia's federal tax service, voted against a rescue plan put forward by Yukos management and backed putting the company into receivership.
Ahead of the creditors meeting, Steven Theede, who had been in charge of the group after Khdorkovsky's arrest in 2003, resigned, slamming the bankruptcy procedure as a "farce."
Rebgun says Yukos has debts of US$18.3 billion and assets worth only US$17.7 billion.
But Yukos managers dispute the figures and say the company is solvent.
Independent analysts have estimated the worth of Yukos assets at around US$30 billion and point out that the company continues to extract around half a million barrels of oil per day amid record-high world market prices.
In 2004, Yukos' main production facility, Yuganskneftegaz, was sold off for US$9.4 billion -- a price that was far lower than its value as estimated by international experts.
Through an opaque financial transaction, the facility ended up in the hands of state-owned Rosneft -- which has risen to become the country's second-largest oil company largely thanks to the boost it received from Yuganskneftegaz.
The ruling by Moscow's commercial court tomorrow will likely confirm the bankruptcy and appoint an administrator who would take charge of the receivership process and the sale of assets, which could last a year.
LAST-MINUTE RESCUE?
The head of Yukos' board of directors, Viktor Gerashchenko, a savvy former central bank governor, has said a mysterious buyer could step in and buy the firm's debt from tax authorities.
"An investor has appeared who has money and who is ready to buy the debt to tax authorities," Gerashchenko said, triggering media speculation on who the knight in shining armour could be.
But Tim Osborne, financial director of GML, which is Yukos' main shareholder and is linked to Khodorkovsky, has played down hopes of a last-minute rescue, saying he was not in negotiations with anyone.
Yukos management also rejected a deal with state-controlled gas giant Gazprom, which is eyeing Yukos' 20 percent stake in Gazprom Neft, formerly called Sibneft, and hopes to buy it back on the cheap in an asset sale.
Rosneft, which has just completed a record-breaking listing on the London and Moscow stock exchanges, has already said it is interested in getting hold of the Yukos refineries.
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