Yukos to vote on bankruptcy option

By Rhys Blakely
Times Online

Yukos could declare bankruptcy before the new year, following fresh claims that could leave the embattled gas giant facing a tax bill for $17 billion.

Shareholders will consider whether to liquidate the firm or to file for bankruptcy at a meeting on December 20, Steven Theede, the Yukos chief executive, announced today.

"Today's situation is not sustainable, we cannot continue like this ... if we are bankrupt, we are bankrupt and we have a legal and a judiciary obligation to file," he added.

The Yukos board decided to call the shareholder meeting a day after Russian tax authorities filed fresh tax claims for nearly $10 billion - in addition to the $7.5 billion dollars in back taxes already confirmed by the courts.

The amount was "well in excess of what anyone expected," said Mr Theede who added that it was possible that the value of Yukos's assets would not cover its tax bill.

Yukos shareholders have endured a volatile year in what is widely regarded as a politically driven campaign against Mikhail Khodorkovsky, the company's founder and former chief executive.

Mr Khodorkovsky was arrested in October 2003 and jailed pending his trial on fraud and tax evasion charges. On Monday, a Moscow court extended his detention by three months.

"If I were free, it would be much more difficult to carry out the dangerous destruction of such a large company," he told the court before returning to his Moscow jail cell.

During the summer, President Putin said he was not in favour of seeing Yukos go bankrupt, a comment that prompted the company's shares to rally. But recent events suggest that the Kremlin has taken a harder line against the oil company. The shares yesterday lost nearly 20 per cent.

Kremlinologists recently pounced on suggestions that Yuganskneftegas, Yukos's most valuable asset, could be spun off in a Government-directed firesale. It was reported that the plant, which pumps around 60 per cent of Yukos's output, could be sold for as little as $4 billion, despite independent valuations of as much $14 billion. Gazprom, the part-state-owned oil and gas company, is seen as the likely buyer.

Mr Theede said the fate of Yukos, which was heralded as a model company in the new corporate-friendly Russia before Mr Khodorkovsky's arrest, rested entirely with the authorities.

"We totally depend on the Government of Russia for our future," he said. "The cards are with the Government."

William Browder, the founder and chief executive of the Hermitage Fund, Russia's largest private-equity fund, told Times Online that the fate of Yukos stands entirely at the whim of President Vladimir Putin.

"Shares in Yukos are for gamblers. Only Putin really knows what is going to happen to the company in the long term," Mr Browder said.