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. Last Updated: 07/27/2016

Yukos Subsidary Workers Get Stock Offer

A major shareholder in oil holding company Yukos has offered workers in four Yukos subsidiaries the chance to swap their subsidiary stock for holding company shares, a Yukos spokesman said.

The spokesman would not confirm the identity of the shareholder, although analysts said it is widely believed to be part of the Yukos-Rosprom group, which controls roughly 96 percent of Yukos.

Yukos, like many Russian oil holding companies, is attempting to boost its control of subsidiaries in order to consolidate them into the holding company. The Yukos spokesman said the anonymous shareholder would acquire 2 percent to 3 percent of each subsidiary's stock should all workers participate in the exchange.

The swap is being offered to workers at oil producers Yuganskneftegaz, Samaraneftegaz and Tomskneft, and to employees of Yukos' Achinsk refinery.

The swap is set at above market rates, meaning subsidiary shareholders will receive more Yukos stock in the exchange than their subsidiary stock is worth at today's market prices. The favorable rate should entice employees to participate, the Yukos spokesman said.

"We want our workers to consider themselves part of the holding company," the spokesman said, although he stressed the swap was not arranged at Yukos' initiative.

In signs posted at Yuganskneftegaz headquarters in West Siberia, the anonymous shareholder conducting the buy offered three Yukos shares for one ordinary Yugansk share. One share in Samaraneftegaz will be swapped for 0.6 Yukos shares; one Tomskneft share will equal 1.8 Yukos shares, and one share in the Achinsk refinery will be exchanged for one Yukos share.

Representatives of U.S. investor Kenneth Dart, an aggrieved minority shareholder in three Yukos subsidiaries, maintained the subsidiary stock is worth far more than the rates offered to workers.

Dart has been locked in an eight-month war with Yukos over the looming consolidation, claiming Yukos' poor management of its subsidiaries has stripped subsidiary stock of its value and enabled Yukos to consolidate its subsidiaries cheaply.

Dart Management Inc. believes that one Yuganskneftegaz share is worth 60 to 80 Yukos shares, while one Samaraneftegaz share is worth 20 to 30 shares, said Sharon Cornwell, spokeswoman for Dart Management. The group bases this claim on economic analysis of the subsidiaries' assets conducted by independent auditors, she said.

"At the moment, market prices have been vastly distorted by Yukos' own actions," Cornwell said.

Dart and many oil analysts have accused Yukos of transferring value out of subsidiaries to the holding company through practices including transfer pricing, whereby a holding company buys crude oil from its subsidiaries at below-market prices and resells it for a hefty profit.

Yukos owns roughly 54 percent of voting stock in its subsidiaries, a spokesman said. The swap is limited to subsidiary workers; it is unclear when other minority shareholders will be offered the chance to exchange stock.