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Financial Times: Western banks fund Rosneft move on Yukos

By Catherine Belton in London
Published: March 21 2007 02:00 | Last updated: March 21 2007 02:00

Rosneft’s securing of $22bn in loans from western banks, confirmed yesterday, puts it in a prime position to take over the rest of Yukos when Russia’s one-time biggest oil major goes under the hammer in bankruptcy auctions that start next week. But a fight could still be brewing over Yukos’ biggest assets.

The state-controlled energy major announced yesterday its board had approved a record $22bn in loans to help finance acquisitions of Yukos assets, valued by a court-appointed bankruptcy receiver at just over $26bn. It said its subsidiary RN Razvitie would use up to $9bn of the funds to bid for Yukos’ 9.44 per cent stake in Rosneft in an auction to be held on March 27. The stake has a starting price of $7.5bn, compared with an estimated market value of $8.86bn.

The long-awaited announcement establishes a significant landmark in western banks’ rush to finance the state’s takeover of the energy sector – despite potential lawsuits from Yukos’ shareholder GML, which has condemned the sales as “theft”.

In the consortium of banks providing the finance for Rosneft’s buying spree are ABN Amro, Barclays, BNP Paribas, Citigroup, Calyon, Goldman Sachs, JPMorgan and Morgan Stanley. Rosneft is to borrow the money in two tranches, of $9bn and $13bn.

Western banks have been flocking to fund the rapidly growing state-controlled titans of Russia’s energy industry despite concerns in some western governments over energy security because of the state’s growing sway.

The loans for Rosneft come as state-controlled Gazprom also seeks financing for its $7.6bn acquisition of a controlling stake in Royal Dutch Shell’s oil and gas venture in the far east island of Sakhalin.

Rosneft president Sergei Bogdanchikov said in a statement yesterday the loans would help his oil group prepare for the Yukos auctions, but it is not yet clear when or how Yukos’ biggest assets will be put up for sale.

Analysts said that a fight was still brewing between Rosneft and state-controlled Gazprom over the spoils of the state’s legal campaign against Yukos. Lots for the sale of Yukos’ biggest assets – valued at roughly $22bn – are yet to be slated.

“The Russian government never sets an auction until the winner has been predetermined,” said Chris Weafer, chief strategist at Alfa Bank. “The fact that a date has not yet been set does suggest there is a fairly major battle still going on for these assets.”

Standard & Poor’s credit analyst Elena Anankina said the uncertain outcome of the biggest auctions meant there were still some risks for the loan deal. “The risks will depend on the outcome of the auctions. There is no clarity on which assets they will buy and at what price,” she said.

The $22bn in loans will more than triple Rosneft’s total debt levels. But Ms Anankina said Rosneft stood to gain up to $10bn from the Yukos sell-off once it was completed as one of the oil group’s biggest creditors, while it could also quickly sell on the 9.44 per cent stake Yukos held in Rosneft. “You can’t rule out that this stake would be sold so as to lower the value of debt.”

Copyright The Financial Times Limited 2007 and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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