Russian oil giant Yukos, its main owner on trial and facing a huge tax bill that could drive it into bankruptcy, said yesterday that a group of creditor banks had declared it in default.
The pressure on Yukos is widely seen as orchestrated by the Kremlin which wanted to snuff out the political ambitions of key shareholder Mikhail Khodorkovsky who is on trial for fraud and tax evasion.
"On July 2, we received the default notice from the banks which helped us organise the $1 billion loan," Yukos's spokesman Alexander Shadrin told Reuters.
The news pushed Yukos shares sharply lower again. They opened 13 per cent lower at 180 roubles on Moscow's MICEX exchange and one of Russia's leading brokerages, UFG, said it was suspending ratings and financial forecasts for Yukos after the latest events.
Yukos shares - down by more than half since early April - dropped up to 17.5 per cent on Friday after the firm received a new tax bill for a further $3.4 billion, and the company warned it might have to cut production this week. The default announcement came hard on the heels of an eight-hour raid on Yukos's Moscow headquarters on Saturday, during which tax police seized documents, computer discs and safes, and days before a deadline for payment of a $3.4 billion tax bill the firm says it cannot meet.
Yukos pumps around a fifth of Russia's total oil production. Saturday's raid on the Yukos headquarters was the latest legal swoop on the firm's offices, but one which analysts said could further dent the share price.
"This will negatively influence the operation activities of Yukos and arouse serious discontent among the company's minority shareholders, including foreign shareholders, and may lead to an even sharper fall in the company's share price," said Sergei Suverov, analyst at Zenit Bank.
The Vedomosti newspaper said yesterday a group of Yukos's minority shareholders were suing the firm's managers, owners and auditors, PricewaterhouseCoopers. It said law firm Lerach Coughlin Stoia & Robbins had filed the suit in New York on Friday.
US ambassador to Russia, Alexander Vershbow, said on Sunday there was an obvious political element to the Yukos and Khodorkovsky cases.
"I think everyone recognises there is a political and an economic dimension to it," he said. "But we just hope that a fair verdict is given."
Yukos has until tomorrow evening to pay the $3.4 billion tax bill for 2000, but with frozen bank accounts it cannot even sell off assets to help. It has not yet been set a deadline to pay a further claim for the same amount for 2001.
The Yukos spokesman did not name the creditors that had declared it in default.
But last week, a Moscow court ordered a freeze of Yukos bank accounts, a move the firm said would make it difficult to continue export trading activities related to the export-backed loan.
That $1 billion pre-export facility was arranged by a number of leading Western banks.
Chronology - Key events in Yukos affair
Russia's Yukos, its key owner on trial facing a huge tax bill that could drive the oil giant into bankruptcy, said on Monday that a group of creditor banks had declared it in default.
The pressure on Yukos is widely seen as orchestrated by the Kremlin which wanted to neutralise the political ambitions of Mikhail Khodorkovsky, also Russia's richest man.
Below is a chronology of the affair, the biggest dispute in post-Soviet Russia between a private firm and state authorities.
July 2, 2003 - Yukos key shareholder Platon Lebedev detained on charges of state property embezzlement. Russian newspapers say detention inspired by Kremlin, worried over growing political influence of Mr Khodorkovsky, then Yukos chief executive.
July 4 - Khodorkovsky summoned by Prosecutor General's office.
July 9 - Prosecutors launch tax evasion probe into Yukos. Its offices are raided. Shares of Yukos, bonds and rouble fall.
July 16 - Mr Khodorkovsky says moves politically motivated.
July 24 - Russia's then Prime Minister Mikhail Kasyanov fears dispute could hurt investment climate.
August-October - Yukos completes purchase of controlling stake in smaller partner Sibneft for around $11 billion to become one of five biggest private oil majors in the world by output and reserves.
Yukos is said to intensify talks with US ChevronTexaco and ExxonMobil on sale of a controlling stake in combined firm, YukosSibneft, whose market capitalisation rockets to $45 billion.
September 20 - Mr Putin says case is economic and criminal and will not interfere. He denies plans to roll back privatisation.
October 22 - Top businessmen urge Putin to intervene.
October 25 - Mr Khodorkovsky snatched from his jet in Siberia, charged with fraud and tax evasion and held in prison.
October 27 - Putin refuses to discuss Yukos with big business. Kremlin sources say Mr Khodorkovsky was trying to secure a majority of votes in parliament at the December election.
US State Department says arrest raises questions about rule of law in Russia. Russian markets, currency plunge.
October 30 - Russian authorities seize controlling stake in Yukos belonging to key owners.
November 3 - Mr Khodorkovsky steps down as CEO saying this will help protect firm. He is replaced by US citizen Simon Kukes.
November 28 - Sibneft suspends merger with Yukos.
December 2 - Tax Ministry says Yukos may have used loopholes to reduce its tax bill by $5 billion.
December 7 - Pro-Kremlin parties dominate parliamentary elections. Liberals supported by Khodorkovsky suffer setback.
December 29 - Tax ministry says Yukos owes $3.4 billion in unpaid taxes for 2000. Firm denies tax evasion.
Feb 3, 2004 - Yukos and Sibneft sign divorce memorandum.
March 11 - Swiss prosecutors freeze up to $5 billion on Swiss banks accounts of key Yukos owners.
March 29 - Khodorkovsky in letter from jail says business should accept Mr Putin's leadership and share wealth.
April 26 - Western banks warn Yukos may default on credits of $2.6 billion.
April 27 - Yukos picks former Central Bank chief Viktor Gerashchenko as new chairman.
May 17 - Yukos says dispute slowing oil output growth.
May 20 - Mr Lebedev's trial begins.
May 26 - Moscow court upholds $3.5 billion claim in back taxes against Yukos. Shares fall to half of October 2003 value.
June 16 - Mr Khodorkovsky to stand trial with Lebedev on almost identical charges. Prosecutors say they caused damage of more than $1 billion to the state. Tax authorities say Mr Khodorkovsky underpaid $700 million in taxes. Both men could face 10-year sentence.
June 17 - President Vladimir Putin says his government would do everything to avert Yukos's bankruptcy.
June 21 - Finance Minister Alexei Kudrin says the government has begun talks with Yukos on how to settle the $3.4 billion tax claim.
June 24 - AGM: Steven Theede replaces Simon Kukes as Yukos's chief executive. Yukos also brings in government insider Viktor Gerashchenko to spearhead its effort to avoid bankruptcy.
June 29 - Moscow court upholds a tax ministry claim that Yukos must pay $3.4 billion in back taxes for 2000.
July 1 - Yukos slapped with another huge tax bill - $3.4 billion for 2001 - in addition to the existing 2000 claim.
July 2 - Yukos, one of the world's 10 biggest oil companies by output, warns it might have to cut production soon.
July 3 - Police search Yukos's Moscow headquarters for eight hours.