Russian oil giant files for bankruptcy

Company's U.S. filing is `last resort' to avert Russian government sale

December 16, 2004|By KNIGHT RIDDER/TRIBUNE

MOSCOW - Yukos, Russia's largest oil company, filed for bankruptcy protection in federal court in Houston yesterday in an attempt to prevent the Russian government from auctioning off its core assets this weekend.

Yukos hopes the filing might force the Kremlin into arbitration over what many analysts say is a politically motivated campaign to bring down the company and its billionaire founder, Mikhail Khodorkovsky.

The company also asked for a temporary restraining order to block Sunday's auction of its main oil-pumping division, Yuganskneftegaz. Yukos said the sale would wreck the parent company, which accounts for 20 percent of Russia's oil output.

Yukos Chief Executive Steven Theede said the bankruptcy move was "a last resort." The filing was made in Texas because Yukos does business in the state and "U.S. bankruptcy law has worldwide jurisdiction," he said.

Yukos reported assets of $12.2 billion against debts of $30.8 billion.

Analysts and government officials in Moscow doubted that the Yukos filing would succeed because Russian law would likely take precedence.

Three Yukos directors also resigned yesterday in protest of what the company called the Russian government's "unprecedented campaign of illegal, discriminatory and disproportionate tax claims."

The Kremlin says Sunday's auction of the Yugansk unit is needed to settle a $25 billion bill for back taxes. The state-owned energy consortium Gazprom is expected to win the auction, paying about $8.6 billion.

Trading in Yukos shares was halted yesterday on the MICEX exchange when the stock plunged 12.76 percent by midday.

The Russian government's prosecution of Yukos has included huge tax bills, midnight raids on offices and the jailing of several of the firm's top managers and its legal team. Most of Yukos' senior executives have fled the country, fearing arrest.

The campaign has alarmed Western investors and diplomats, including the Bush administration. It appears to have begun over a dispute between Yukos founder Khodorkovsky and Russian President Vladimir V. Putin. The oil tycoon, once Russia's wealthiest man, with a fortune estimated at $15 billion, angered Putin with his participation in opposition politics.

Khodorkovsky was arrested 15 months ago when armed police wearing black ski masks stormed aboard his jet during a late-night refueling stop in Siberia. He was charged with fraud and tax evasion. His trial is about to enter its fifth month.

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