Embattled Russian oil firm Yukos and its shareholders have rejected a demand from junior merger partner Sibneft for management control of the combined firm, a Yukos source said.
"They said that unless we agreed to the management changes they would break the deal. We said we would not accept such a proposal, and would await their letter," the source told Reuters on Sunday.
Sibneft's core shareholders, led by the owner of London's Chelsea soccer club Roman Abramovich, have already been paid $3 billion plus an $8 billion 26 per cent stake in the combined group for their 92 per cent shareholding in Sibneft by the core shareholders of larger Yukos.
But the Sibneft camp suspended the deal on Friday, just as a new board was about to be sanctioned for what would be the world's fourth-largest oil company by production.
The shock move has piled the pressure on Yukos, whose top shareholder Mikhail Khodorkovsky, a political opponent of President Vladimir Putin, has been jailed on charges of fraud and tax evasion. Yukos offices have also been raided by state prosecutors and the company has received threats to remove drilling licences.
Yukos shares dropped five per cent by mid-session in Moscow before recovering to stand down 2.7 per cent at $11.05.
Sources on both sides of the dispute have said that Sibneft's president Eugene Shvidler - originally earmarked as chairman of the merged company YukosSibneft - now wants to be its chief executive, in place of Simon Kukes, who was drafted by Yukos to replace the jailed Mr Khodorkovsky. The Sibneft camp also want to install Alexander Voloshin, a former Kremlin chief of staff and a businessman, as chairman.
The Yukos source described how Mr Shvidler called a private high-level meeting on Friday where a delegation of Yukos shareholders, executives and lawyers went to Sibneft's Moscow office.
The Yukos source said that Voloshin was sitting beside Mr Shvidler when the Yukos team arrived, and that together the two men delivered the ultimatum on management changes.
The Yukos source said he believed Mr Voloshin may have become a shareholder, and that he took a "very active part in the meeting".
A spokesman for Sibneft in Moscow said he was "not aware that Mr Voloshin was one of our core shareholders", but noted that he was free to buy shares on the open market. He declined comment on whether any such meeting took place on Friday.
According to the Yukos source, Mr Shvidler and Mr Voloshin told the Yukos delegation that its management lacked a "political roof" to protect them from the whims of senior bureaucrats.
Analysts are divided about whether Mr Abramovich was pressured into Friday's merger suspension by a Kremlin keen to pile the agony onto Mr Khodorkovsky, whether it was an independent move to take greater control of the merged firm, or whether Sibneft simply wants to break away from its troubled partner.
In a statement over the weekend, Sibneft said its move to suspend the merger was business related, and had nothing to do with politics. Yukos declined comment.
Attending the Friday meeting on behalf of the Yukos camp were key shareholder Vasily Shakhnovsky, Mr Khodorkovsky's lawyer Anton Drel, and Alexander Temerko for the management.
Mr Shvidler was photographed two days later on Sunday next to Mr Abramovich watching the 37-year-old tycoon's Chelsea team beat Manchester United 1-0 to go top of England's Premiership football league.