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. Last Updated: 07/27/2016

Creditors Pick Receiver for Sidanko




In a move hailed as a step toward transparency, Sidanko creditors have nominated an executive from Arthur Andersen's Moscow office as external manager for the bankrupt oil company.


"We as a creditor and a shareholder believe the appointment of an external manager from one of the most respected accountancy companies is the right step," said Howard Chase, spokesman for international oil major BP Amoco, which owns a 10 percent stake in Sidanko.


Before it goes into effect, the nomination will have to be approved by an arbitration court at a March 2 hearing into the bankruptcy suit filed against Sidanko by a previously unknown company. Chase, however, said he was optimistic the court would accept the recommendation as more than 80 percent of the creditors supported it.


A spokeswoman for Arthur Andersen confirmed the nominee was Sergei Sereda, the Moscow director of the corporate recovery division. Sereda declined requests for an interview.


Russian bankruptcies are notoriously opaque. Similar cases of bankruptcy suits filed by obscure companies have led to asset stripping. But analysts and minority shareholders said the appointment of Sereda from Arthur Andersen appeared to be a good sign that the Sidanko restructuring would proceed in an aboveboard fashion.


"It appears that it's good for the transparency of the process and we support anything that aids transparency," said Bill Browder, manager of the Heritage Fund, which owns a 2 percent stake in Sidanko.


"It seems like the ideal person," said Jim Hendersen of MFK Renaissance. It was likely that BP Amoco in particular had pushed hard for Sereda.


Although MFK Renaissance runs the Sputnik Fund, one of Sidanko's creditors, Hendersen was not privy to the talks.


"I was quite surprised to see this," Hendersen said. "I thought it might [go to a company insider], but if it's [Arthur Andersen] it obviously hasn't."


"Selecting a Russian from a Western accounting firm makes for a good combination," agreed Ruslan Nickolov, oil analyst at Nomura International in London. "He's less likely to be politically motivated and yet would have the skills to deal with Sidanko."


The creditors group met Thursday night and finally came to a decision early Friday morning after more than nine hours of talks, said BP Amoco's Chase.


Earlier this week, BP Amoco announced it was writing down its stake in Sidanko by $200 million, valuing it at $371 million. The creditors, which include Sidanko subsidiary Chernogorneft, as well as the Sputnik Fund, headed by former Sidanko chairman Boris Jordan, were faced with the choice of liquidating assets or appointing an external manager to restructure the company. Chase said the creditors had been unanimously in favor of restructuring.


The past six months have been rough for Sidanko, which is part of oligarch Vladimir Potanin's Interros financial-industrial group. Four of its nine subsidiaries are in various stages of bankruptcy and the company has been forced to halt all of its exports, by far the major source of income for Russian oil companies.


The Russian press has actively speculated about other financial groups or oil companies being interested in moving in on one or more of the subsidiaries. Fuel and Energy Minister Sergei Generalov has likewise talked about some of the subsidiaries being merged into a new national oil company.


It is unclear what will happen with the subsidiaries if Sidanko is under external management. A bankruptcy lawyer said assets could be sold off with the agreement of all the creditors and the shareholders, but he added that such agreement might be difficult to obtain.


In November, Jordan, who also heads the MFK Renaissance investment bank, was appointed Sidanko chairman, in what many now see as a last gasp bid to save the company from insolvency.


At the end of last month, however, an obscure company called Beta-Eko opened bankruptcy proceedings against Sidanko itself. The timing of the move, and the fact that no information at all was forthcoming about Beta-Eko, prompted many industry insiders to surmise that the bankruptcy had been initiated by Interros to protect the company's assets from less-friendly creditors.


Shortly thereafter, Jordan resigned, citing conflict of interest because of his connection with the Sputnik Fund. Analysts discount this explanation, saying that it is more likely he felt that his deal-making skills would be more or less unneeded if an external manager was to be appointed.