EBRD Flexible on LUKoil Loan

The European Bank for Reconstruction and Development said Tuesday that the nations No. 1 oil firm LUKoil could still qualify for a $150 million loan despite its laggardly progress on making its operations transparent.

An EBRD spokesman in the banks London office said LUKoil could still receive the funds despite the fact that transparency is a key condition for the banks loans.

"There is some room in our agreement," said the official, who asked not to be named.

His remarks came after LUKoil said it will probably delay the publication of its complete financial results in accordance with U.S. generally accepted accounting principles, or GAAP, until the companys annual general meeting scheduled for June 2001.

The Financial Times quoted LUKoil president Vagit Alekperov as saying that acquisitions had caused complications and delays in preparing the figures.

The adoption of GAAP is one of the conditions for the EBRD loan to LUKoil. The terms of the loan, however, could allow LUKoil to receive the first tranche ahead of the publication of the full GAAP figures, the Financial Times reported Saturday.

The EBRD spokesman said the bank anticipates that LUKoil will provide a sufficient amount of information about its 1999 financial results.

The spokesman declined to say whether the EBRD thought LUKoilss delay in adopting GAAP was justifiable.

An EBRD statement in May quoted Peter Reiniger, head of the banks industry and commerce group, as saying LUKoils lack of external financing limits its growth opportunities.

"Our loan will provide a reliable source of working capital financing," he said.

Shareholders will no doubt be disappointed by the delay. They had been hoping that the publication of GAAP would explain why LUKoils profits are lower than those of its smaller competitors and would clarify the ownership structure of Reforma Investment, a Cyprus-based group that purchased a 9 percent stake in LUKoil in a 1999 privatization auction.

The Financial Times quoted a Western fund manager as saying the reason for the delay was that LUKoil does not need the money and doesnt want to release the information.

Last week LUKoil announced it had bought a chain of 1,300 U.S. gas stations for $71 million.

GAAP accounts are also one of the conditions for LUKoil to issue American Depositary Receipts on the New York Stock Exchange. LUKoil representatives recently announced that the ADR listing would not take place before next fall.

The $150 million facility represents the continuation of LUKoils long-term cooperation with the EBRD. The EBRD has financed two previous LUKoil projects, the Chirag Early Oil Project in Azerbaijan and the Permtex joint venture in Russia.