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. Last Updated: 07/27/2016

Tax Authorities Raid Offices of Sidanko

The ongoing battle for control over one of Russia's richest oil fields was ratcheted up another notch this week when federal tax authorities raided the offices of the Sidanko oil and gas company.

In an official statement, Sidanko said that it considers the raid Tuesday "an act of intimidation whose goal is to exert pressure on the courts," which have intervened to oversee bankruptcy proceedings being brought against it by creditors.

In fact, analysts said, the raid may have been a way of further damaging Sidanko and BP Amoco, its major strategic investor, in the eyes of the foreign investment community.

BP Amoco did not return calls Wednesday.

Tax officials denied that the raids had anything to do with the struggles surrounding the ailing oil major.

The tax police were simply acting to investigate possible tax violations at the company, a spokesman said. Details on the reasons for the raid and its results were unavailable Wednesday.

With Russia under pressure from its own spending needs and the International Monetary Fund's demands that it raise its revenues, the tax authorities have been energetically seeking to raise tax collection rates.

Sidanko, which was declared bankrupt last May, has been struggling to come to an agreement with creditors on an amicable settlement that would end the insolvency proceedings. Several such settlements have been derailed by Russian courts at the last minute.

Total creditors' claims on Sidanko amounted to about $400 million, the company said last month.

Analysts said Sidanko possessed few assets worth the trouble of acquiring, but Chernogorneft, a subsidiary of Sidanko that the Bank of New York estimated possessed 3 billion barrels of oil reserves, is an exception, making it an ideal target for a hostile takeover.

Tyumen Oil Co., or TNK, which already controls part of the oil field worked by Chernogorneft, has been eager to acquire its rival.

"Merging its operations with Chernogorneft would give TNK ownership of all the oil-producing enterprises of the Samotlorskoye oil field, and make its business much more profitable," Alexander Agibalov of Aton brokerage said.

In fact, TNK has largely succeeded in getting control of Chernogorneft by buying up a majority of its debts, something that has given it status as the bankrupt company's prime creditor, allowing it to control the appointments of temporary administrators, said Igor Kourennoi of CentreInvest investment bank.

Under Russian bankruptcy law, bankrupt companies are given a court-appointed temporary administrator, who oversees the company's affairs and the liquidation of its debts. Chernogorneft now sells its oil through a trading company reportedly controlled by TNK.

Meanwhile, TNK has been accused by BP Amoco and Sidanko of trying to obstruct efforts at an amicable settlement between creditors by claiming to have reached agreement on buying some of Sidanko's debts from Western banks.

TNK has announced on several occasions that it had reached an agreement with a Western bank to buy its Sidanko debts and that the amicable settlement deal had therefore fallen through. No confirmation has been forthcoming regarding such a debt purchase.

TNK has been offering to buy at face value the approximately $145 million debt Sidanko has outstanding on a syndicated loan that had been put together by Dresdner Bank AG, Bayerische Hypotheken- und Wechsel-Bank AG and Greenwich NatWest.

Creditors announced last month that they had reached agreement on the terms to restructure $217 million of Sidanko's debt, and had agreed to put $64 million of new capital into the company.

However, the settlement cannot go through until settlements have been reached at several Sidanko subsidiaries, including Chernogorneft.

So far Sidanko itself has staved off liquidation, with the help of BP Amoco, which owns 10 percent of the company. The international oil giant has also said it could raise its share to a 25 percent blocking stake in exchange for a debt purchase.