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9 Jan, 2008 05:26

Yukos saga enters final chapter

One of the most memorable events of 2007 was the demise of what was once Russia’s largest oil company – Yukos.

Although its fate was pretty much sealed in late 2003, with the arrest of its head Mikhail Khodorkovsky, it wasn't fully dissolved until 2007, when its assets went under the hammer and local stock exchanges stopped trading its shares.

The Moscow Arbitration court declared Yukos bankrupt on August 1, 2006, after three years of relentless litigation with the tax authorities.

Back then, Yukos' external supervisor Eduard Rebgun said the company made no effort to rescue itself:

“If Yukos wanted to save itself – it could have done so. But I failed to see any opportunities for recovery during our financial analysis. I am supposed to defend the interests of the creditors and of society as a whole,” Rebgun said.

Some observers say last Spring's bankruptcy auctions of Yukos assets were rigged.

Yukos board chairman Viktor Gerashchenko said the fate of the assets had already been decided.

“Apart from Rosneft there was another company, which entered the auction under specific conditions and reasons, but did not actually do anything. I think this company could have pushed up the sale price and Rosneft would have had to respond and the auction would have been more interesting. But what happened is really a back room deal,” Gerashchenko said.

State-owned Rosneft snapped up the bulk of Yukos' assets at these auctions, including its production units, refineries and even its headquarters in the centre of Moscow.

And the acquisitions were quickly reflected in Rosneft’s balance sheet.

The company reported stronger-than-expected results in the second quarter of 2007. Its net profit jumped a whopping 49% year-on-year.

Artyom Konchin, analyst of Aton Unicredit, says it's no surprise that Rosneft has gone from strength to strength.

“Rosneft has an amount of ex-Yukos assets plus does no longer have to pay refining tolling fees which it used to pay to the refineries previously owned by Yukos,” Konchin said.

Rosneft, now Russia’s largest oil producer, will continue demonstrating impressive growth, because it has just finished consolidating all the Yukos assets. But its head, Sergey Bogdanchikov, says acquiring Yukos assets has its challenges.

“Along with the Yukos assets we acquired their liabilities, which have increased Rosneft’s totals debt to $US 26 billion. Although this does not affect our ability to function, we plan by 2010 to reduce our debt, as a percentage of total assets, to 30%. We will then be in line with Russian and international standards,” Bogdanchikov said.

Yukos had paid off more than $US 28 billion to its creditors by selling assets at auction.  It also defaulted on $US 3 billion worth of debt.

Although Yukos has all but disappeared from Russia’s business landscape, hundreds of Yukos petrol stations around the country are still waiting to be re-branded.

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