Yukos creditors choose bankruptcy
The creditors of stricken Russian oil producer Yukos voted for bankruptcy today, asking a court to kill off the moribund company and rejecting a rescue plan proposed by its owners.
Yukos' owners claim the Kremlin deliberately destroyed the company with arbitrary back-tax claims running to $33 billion.
"It's deader than a doornail," said Eric Kraus, a fund manager at Moscow-based Nikitsky Russia Fund. "There's going to be nothing left. It's going to be sold in pieces."
The creditors overwhelmingly backed a proposal by Yukos' court-appointed administrator, Eduard Rebgun, to ask a Russian court to declare the company bankrupt at a hearing on 1 August.
"I consider that it is impossible to restore Yukos' solvency," Reuters quoted Rebgun as telling the meeting.
"Yukos should be declared bankrupt and should go into receivership ... Creditors' total demands could not be satisfied by the sale of all the (company's) property."
Analysts have long said Yukos was doomed, with state-run producer Rosneft, a key creditor, expected to benefit most from the demise of what was once Russia's leading oil player and largest listed company.
"Rosneft will get the pick of the best pieces and the rest will be left to an auction," Kraus said as the creditors brushed aside the survival plan.
Yukos is solvent and can be restructured to maintain shareholders' investments," Tim Osborne, head of Yukos' main owner GML, told the creditors by teleconference from the UK.
"Mr Rebgun has seriously undervalued the assets to provide grounds for his recommendation to liquidate the company," he said.
Rebgun says Yukos has liabilities of $18.3 billion but assets worth only $17.7 billion. But Yukos' owners said consultants Alvarez & Marsal have valued the assets at $37.7 billion, meaning it is solvent to the tune of about $20 billion.
"This means that there is no basis to liquidate Yukos," the company said in a statement.
But Rebgun said the owners' survival plan was not legal and a Rosneft representative said it did not answer questions such as how and when the company would pay off creditors.
Members of Rebgun's team said their analysis had discounted the value of Yukos assets, undercutting the market values by 15% for refineries and as much as 40% for Yukos' 20% holding in oil player Gazprom Neft.
The creditors' meeting also elected a creditors' committee with seven members: four from the Federal Tax Office, two from Rosneft and one from Yukos' Samaraneftegaz subsidiary.
After the creditors voted, Yukos' shares plunged by a third to touch a 12-month low of 13.5 roubles, valuing the company at about $1.35 billion, or 97.5% below its September 2003 peak.
Since that high, Russian officials have ravaged the company, with courts jailing former chief executive Mikhail Khodorkovsky for eight years for fraud and tax evasion and bailiffs selling off Yukos' main asset, Yuganskneftegaz.
Khodorkovsky's conviction last year was criticised as selective justice against an ambitious "oligarch" who posed a political threat to President Vladimir Putin.
The loss of Yugansk decimated Yukos and bolstered Rosneft, which bought it after a forced auction in 2004. Rosneft, its oil production boosted threefold by Yugansk, has just raised $10.4 billion in Russia's largest stock market float.
Yukos still owes the Federal Tax Office around $13 billion and around $2.8 billion to Rosneft, its second-largest creditor, which has said it may want to buy some of Yukos' refineries.