By
updated 12/3/2003 3:43:06 PM ET 2003-12-03T20:43:06

Yukos, the embattled Russian oil group, wants confirmation within days from its rival Sibneft of the cancellation of the planned merger of the two companies as it gears up to seek $1 billion in compensation.

The news emerged as representatives of the key shareholders of both companies held urgent talks in Russia, Israel and the UK following the refusal by Roman Abramovich, Sibneft’s key shareholder, last Friday to approve a new board to run the combined group as previously agreed.

Individuals close to Yukos said it was unlikely that the merger, designed to create a $35 billion group that would have been the world’s fourth-largest oil producer, would go ahead after Mr. Abramovich tried to impose Eugene Shvidler, who ran Sibneft for him, as the chief executive of the combined group.

They said Sibneft also wanted to name as the chairman Alexander Voloshin, the former head of the Russian presidential administration who resigned last month, in a move that appears designed to provide political protection and safeguard the value of Mr. Abramovich’s 26 per cent stake in the combined company.

One individual close to Yukos indicated that if they failed to receive a letter from Sibneft formalizing the end of merger talks, they were likely to seek independent arbitration which may end up in the London courts. It would not be a “quiet divorce,” he said.

Yukos was keen for Friday’s extraordinary general meeting to proceed even after Sibneft said it would not approve the other agenda items of a new board and company charter, so that shareholders could approve a $2 billion special dividend pay-out ahead of the merger.

Some 44 per cent of Yukos’s shares, held by the detained oligarch Mikhail Khodorkovsky and his partners, have been frozen by Russian prosecutors as part of fraud and tax evasion charges, but the dividends can in theory be paid out.

One individual with knowledge of both companies said on Sunday he believed the collapse of the merger - and the removal of Mr. Abramovich as a powerful patron - could ultimately trigger the dismemberment of Yukos, through tax evasion charges of up to $10 billion and the removal of its oil production licenses.

Yukos and affiliated companies are believed currently to have 60 managers under investigation by Russian prosecutors who have launched a series of fraud and tax evasion probes. They are forbidden from leaving the country.

Sibneft’s proposed nominations came after Mr. Abramovich held a meeting with President Vladimir Putin late last month, followed which the Russian tax and criminal authorities announced that they had no case to bring against Mr. Abramovich.

Leonid Nevzlin, a key Yukos shareholder, said over the weekend that Mr. Shvidler had called him last week and said the Kremlin had demanded that a public statement be made on the suspension of the merger talks.

Russian officials have insisted that there is nothing political about the investigations around Yukos, and Mikhail Kasyanov, the prime minister, stressed on Saturday that the government had no desire to nationalize the company.

© The Financial Times Ltd 2013. "FT" and "Financial Times" are trademarks of the Financial Times.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.40%
$30K home equity loan FICO 5.80%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.70%
13.70%
Cash Back Cards 17.66%
17.91%
Rewards Cards 17.05%
17.17%
Source: Bankrate.com