On October 12, the Justice Ministry announced that it had completed its appraisal of Yuganskneftegaz and had decided to sell part of Yuganskneftegaz through the Russian Federal Property Fund (RFFI). The Justice Ministry statement reads that Russian tax authorities were not satisfied with the speed of Yukos' debt repayment, and the sale of a package of Yuganskneftegaz shares would guarantee that the existing debt is repaid. Bids will be submitted before the end of the year, most likely in late November. In response, Yukos owners said the authorities had created conditions so that the company could not repay the debt in time.
Because the statement Alexander Buksman, head of the Moscow division of the Justice Ministry, gave was somewhat chaotic, it remained unclear for the market participants how the situation would develop further.
First, according to the ministry's data, Dresdner Kleinwort Wasserstein investment bank, the independent appraiser, said the lowest possible price of Yuganskneftegaz was $10.4 billion. Yukos' debt is $3.73 billion. In experts' opinion, this is considerably lower than the real market value of the company, as Yuganskneftegaz's production licenses alone are worth $10 billion and including wells, property and infrastructure, this figure may reach $15-$17 billion. The foreign press reported that the bank's real valuation was $15.7-$18.3 billion. Therefore, it is possible that the $10.4 billion sum in the bank's report was the cost of the enterprise's liquidation, and the Justice Ministry chose the most conservative assessment that would not provoke a conflict on the market.
At the same time, $10.4 billion is rather grounded, as there are a number of claims in regard to the company. For example, the Natural Resources Ministry has claims on the license agreements and the possibility that the licenses will be revoked reduces the company's value.
Second, it is unclear what a 60% discount means. Alexander Buksman said: "The appraiser calculated a discount of up to 60% considering the high risks for a potential buyer." Whether the $10.4 billion includes this discount was not clarified. According to Maksim Shein, chief analyst at Brokerkreditservis, if Yuganskneftegaz was valued at $16-$17 billion, the discount is normal. However, if the discount is for the $10.4 billion valuation, then the sale price of Yugansk will be much lower - about $4 billion. That price is reasonable for the authorities because domestic companies that are loyal to the state may buy Yuganskneftegaz. In the opinion of Sergei Suverov from Zenit bank, Yuganskneftegaz could be sold for less than $10.4 billion, as the bailiffs control the price. It is also unclear whether the company will be sold as a whole or in parts.
The Justice Ministry's statement had a huge impact on the stock market. On October 12, after the statement, Yukos stocks fell by almost 7.6% and trading was suspended for an hour twice. Other companies' stocks also fell. However, a similar adjustment after a long period of growth had been expected. According to Denis Pryanichnikov from the Otkrytie Broker House, the market will now fall lower than 650 points on the RTS index.
After the sale of Yugansk assets, Yukos will no longer be the largest oil company in Russia and its market capitalization will be reduced, however, there is nothing that cannot be reversed on the Russian stock market. What is happening was expected for a long time. The authorities have pursued a task-oriented policy to reduce Yukos' market value, and it would be strange to expect the real market value of the company reflected in the valuation.
It is unclear which oil companies will bid on Yuganskneftegaz. The heads of Gazprom and Lukoil said they would not buy Yugansk assets, but if the assets are liquidated, they might change their minds. Surgutneftegaz, Gazprom and Rosneft are possible purchasers. According to Maksim Shein, as of July 1, Surgutneftegaz had $5.2 billion in spare money, Gazprom had $2.8 billion, ExxonMobil has about $14 billion and CNPC has $18 billion. Will the Russian authorities sell Yuganskneftegaz to foreign investors after their efforts to reduce the company's market value?
There is a possibility that claims against Yukos will be sought even after the Yuganskneftegaz case is over. The Tomsk region internal affairs department launched criminal proceedings against one of the heads of OAO Tomskneft for large-scale tax evasion. Tomskneft is one of Yukos' main oil production assets. OAO Tomskneft and Samaraneftegaz's stock has been arrested because of the oil holding company's tax evasion case.
