[Mb-civic] Yukos says bankruptcy looming BBC

[Michael Butler]

 Yukos says bankruptcy looming
 Troubled oil giant Yukos has said it may have to declare itself bankrupt if
the Russian government carries out a forced sale of its production unit.

 Yukos bosses issued a statement on the company's future on Thursday, as its
shares continued to slide.

 The firm warned that if the sale triggered a bankruptcy filing, it may not
be able to meet export contracts.

 Yukos said it could run out of cash by mid-August as half its monthly
receipts of $1.8bn are going to frozen accounts.

 A Moscow court has ordered Yukos to pay back-taxes of $3.4bn (£1.8bn)
immediately, and proceedings have begun on a second demand for a similar
amount.

 Its accounts have been frozen, and on Monday bailiffs said they would
sell-off the Yuganskneftegaz production unit that pumps 60% of the oil
produced by Yukos.

 Deadline 

 Yukos said that although it has able to cover its cash deficit during July,
it "may not be able to continue this beyond, at the latest, mid-August".

 It added it was "making every effort" to raise money to pay the tax demands
and cover its operating costs.

 "However, should those efforts prove unsuccessful and Yuganskneftegaz is
sold... the management of the company would be compelled to announce the
bankruptcy of Russia's largest oil company".

 Chief executive Steven Theede told a press briefing that Yukos has paid
fees to use export pipelines owned by state monopoly Transneft until the end
of August, Reuters reported.

 Yukos pumps 1.7 million barrels of oil a day, or 20% of output from Russia.

 Investors quitting

 Yukos' shares had rallied in recent weeks amid optimism that an agreement
could be reached between the authorities and the company.

 But the government's decision on Monday to sell off Yuganskneftegaz dashed
hopes of a settlement.

 The firm's share price plummeted by another 15% on Thursday, hitting a
30-month low after the statement, having already dropped sharply on both
Tuesday and Wednesday.

 "I don't think the statement gives us any new information. It still leaves
us guessing," said John Bates, an emerging markets analyst at WestLB in
London.

 "The problem (the) government has is that they are basically taking
control... of Yukos but they are not making the market attractive for
potential buyers," he added.

 Yukos fears that Yugansk will be sold for a price far below its market
value - the division has reserves valued at $30.4bn.

 The firm, which has tried to negotiate sales of shares to raise the money,
said the choice of Yugansk as a sales target was "perplexing" given that its
reserves were worth so much more than the $3.4bn in taxes for 2000 the court
has ordered it to pay.

 Trouble in store 

 Analysts are concerned the sale would amount to a giveaway to a company
close to the Kremlin.

 Leading the pack, many believe, is Surgutneftegaz, with other candidates
such as gas giant Gazprom and state-owned Rosneft saying they were not
interested.

 Yukos is caught up in a long-running feud between the Kremlin and its
former chief executive Mikhail Khodorkovsky, who is on trial for fraud and
tax evasion.

 On Wednesday, Mr Khodorkovsky was in court to hear some of the tax and
fraud-related charges he faces read out by prosecutors.

 Last week, he described the accusations against him as "shameful".
 Story from BBC NEWS:
 http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/3915889.stm

 Published: 2004/07/22 10:50:37 GMT

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