News > International
Sidanko hit with suit
February 1, 1999: 10:03 a.m. ET

Russian oligarch's oil colossus faces bankruptcy proceedings
graphic graphic
LONDON (CNNfn) - Sidanko, Russia's fifth-largest oil company, is facing bankruptcy proceedings after a creditor filed suit in a Moscow court Friday to recover an unpaid debt.
     The suit could prove an embarrassment for BP Amoco, which owns a 10 percent stake in the company, acquired in 1997 as a way of securing an interest in an eastern Siberian gasfield. The gasfield is seen as a launching pad for a gas pipeline into China.
     In a lawsuit filed Friday in the Moscow region arbitration court, the Russian creditor, ZAO Betha-Ekko, accused Sidanko of failing to settle a $22,000 debt, The Wall Street Journal reported.
     A senior Sidanko executive told the newspaper that the lawsuit had been orchestrated by Sidanko's parent company, financial-industrial group Interros, in a bid to prevent the oil company's break-up and to give it more time to restructure its debt.
     Interros is run by Vladimir Potanin, one of a small group of financial oligarchs that some Russians accuse of enriching themselves at the expense of Russia's overall welfare.
     Among the companies rumored to have designs on some of Sidanko's properties is Tyumen Oil, a property of Russia's Alfa Group.
     Sidanko debt is estimated at around $343 million and 1.36 billion rubles, according to Reuters. The Journal said the company owes more than $150 million to several overseas creditors, including Germany's Dresdner Bank and National Westminster Bank's investment banking arm, Greenwich NatWest.
     Sidanko's travails follow the near-crumbling of Russia's financial system last August, when the country unleashed panic by canceling debt repayments and effectively devaluing the ruble, wiping out many Russians' savings overnight.
Low oil prices deal blow

     In Sidanko's case, the troubles are compounded by a collapse in worldwide commodity prices, particularly oil.
     The Interros group owns a controlling stake in Norilsk Nickel and in Uneximbank, both of which have suffered from Russia's ongoing economic crisis and the outflow of overseas capital from the country's emerging markets.
     Uneximbank told creditors last week it could not pay the interest on a $50 million international bond, Reuters reported.
     Government-mandated reductions in oil export quotas have contributed to a rapid spiraling of Sidanko's outstanding debts.
     BP Amoco (BPA) is likely to play a role in the restructuring of the Russian company.
     BP Amoco officials met Russian Prime Minister Yevgeny Primakov at the World Economic Forum's annual meeting at Davos, Switzerland to discuss Sidanko's future.
     Nicholas Butler, BP Amoco's group policy adviser told Reuters that Sidanko "still has significant assets. The aim would be to get a restructuring in such a way to that it could continue as a very positive piece of business."
     A BP spokesman also told Reuters "we believe that the company (Sidanko) is viable in the long term, even with oil prices as low as they are, and we have been working to explore ways of dealing with liquidity problems and to facilitate a common approach among shareholders."
     Under Russian bankruptcy proceedings, Sidanko would be subject to constraints of the kind imposed on U.S. companies filing for Chapter 11 protection.
     During the proceedings, Sidanko will effectively have its debt obligations frozen while the company tries to drum up new capital in a restructuring. Back to top
     --From staff and wire reports


BP Amoco cutting 1,600 jobs - Jan. 26, 1999

BPAmoco to cut 900 jobs - Jan. 8, 1999


BP Amoco

Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney