'Managed' Yukos Sale Fetches $160M

In the first sale of an enterprise acquired under the government's loans-for-shares program, a one-third stake in the giant Yukos oil company was awarded Monday to an unknown Russian company in what analysts called a "stage-managed performance" reminiscent of last year's controversial scheme.


The private company ZAO Monblan won the auction with a bid of $160.1 million, just $100,000 over the starting price, prompting speculation that it is linked with the powerful Bank Menatep, which currently controls a majority stake in Yukos, Russia's second-largest oil major.


Konstantin Kagalovsky, deputy chairman of Menatep who also headed the tender commission, told a news conference that Monblan was unrelated to the bank, which organized Monday's auction of the shares.


"There is no connection between Monblan and Menatep. They are different organizations," he was quoted by Reuters as saying.


The only other participant in the auction was the Moscow Food Combine, affiliated with the Rosprom group, Menatep's industrial arm, which bid an even $160 million. Foreign investors, who are not allowed to own more than 15 percent of a Russian oil company, were not able to bid for the 33.3 percent share block.


Both the structure of the auction and its outcome recalled last year's loans-for-shares deals, where insider banks loaned money to the government in return for management rights over some of Russia's top blue-chip companies.


"What strikes me about this purchase is that it's basically the same price that Menatep paid in the first place," said Steve Allen, an oil analyst at CentreInvest Securities.


Although Menatep attempted to distance itself from the deal, evidence suggests the bank was involved, he said. Otherwise, "they've given a huge advantage to this company who's bought it in that no extra money on profit has to be paid to the government."


"And now that company is free to sell it at a higher price and not pay the 70 percent [of capital gains] that has to go to the federal government," he said. "If they were connected to Menatep, that would be a pretty clear backdoor way for them to make profits on it."


Monblan bid $160.1 million for the 33.3 percent stake in Yukos and will also have to commit a further $200 million in investment over two years under the auction rules. That stake represents the chunk that Menatep now holds in trust for the government after its affiliate company ZAO Laguna bid $159 million in an auction last December. Menatep also organized that tender, on behalf of the State Property Committee.


Menatep acquired a further 45 percent in Yukos at an investment tender and later an additional 8 percent, giving it virtually total control.


"Yukos has become the first private oil company," Kagalovsky said. "The state has just 0.1 percent of the shares, which have not been sold at auctions."


Vitaly Chernyak, United City Bank's vice president overseeing the Russian oil sector, said Monday's auction was a logical conclusion to the loans-for-shares scheme, which gave investors the right to sell the stock after last Sept. 1.


"The same is expected for Sidanko and Sibneft," he said, referring to Russia's other two oil majors that went under the hammer in the same program last year, winding up in the hands of financial heavyweights Uneximbank and Logovaz.


Natalya Mandrova, a Menatep spokeswoman, said Monblan would take over Laguna's investment pledge of $200 million and compensate it for the $70 million it already had put into Yukos.


She said Laguna, Monblan and Yukos are expected to sign an agreement next month to settle their financial relations and other ownership issues. But she denied Menatep had any connection with Monblan.


Chernyak doubted Menatep's claims of massive investment in Yukos, which the government accuses of running up more than $500 million in tax debts.