"The revision reflects Standard & Poor's concerns about potential implications for Sibneft of the fiscal and legal pressures on Sibneft's 92% shareholder, OAO NK Yukos (CCC/Watch Neg/--)," the press release said. "These have been mounting following the court decision on a $3.4 billion tax claim against Yukos (subject to an appeal) and a freeze of the company's assets (including its 92% stake in Sibneft).
"'This raises uncertainty over Sibneft's status in the event of a Yukos default or bankruptcy, further complicates the reversal of the Sibneft takeover by Yukos, and increases uncertainty over Sibneft's shareholding structure,' said Standard & Poor's credit analyst Elena Anankina. "If Yukos were allowed by the court -- which is not currently the case -- to sell its stake in Sibneft (fully or partially) to pay taxes or debt, we would be concerned that Sibneft might increase its leverage considerably to
finance a stock repurchase by the company or its former shareholders."
"The negative CreditWatch implications on Sibneft also highlight Standard & Poor's concerns over the company's aggressive corporate governance practices and financial policy. Indeed, it is unusual that Yukos, a 92% shareholder, does not have any effective control over Sibneft's management, assets, or cash flows, as illustrated by several failures to elect its representatives to Sibneft's board of directors. Although the rating on Yukos does not act as a formal constraint for Sibneft, this situation illustrates aggressive corporate governance practices, which put pressure on Sibneft's rating.
"The CreditWatch status of Sibneft will be resolved when the company's shareholding structure, financial policy, and corporate governance practices are clarified. Standard & Poor's will continue to closely monitor the situation around Sibneft and Yukos."
