OAO Rosneft, the Russian government-controlled oil company that has bought OAO Yukos‘ Yuganskneftegaz (“Yugansk”) huge oil unit, has been put on credit watch by Standard & Poor’s Ratings Services in a quintessentially Western financial assessment of the riskiness of the deal.
S&P observed that were “major uncertainties regarding the financing of the acquisition and the tax and litigation risks.” S&P also continued its credit watch on OAO Gazprom, the Russian government-controlled natural gas company that is scheduled to merge with Rosneft by the end of January.
Gazprom and Rosneft are coordinating the acquisition in defiance of a Bankruptcy Court’s temporary restraining order in Yuko’s pending chapter 11 case in Houston that enjoined firms from participating in the Russian government’s auction of Yugansk to pay for alleged Yukos’ tax debts. Yukos’ attorneys announced in open court last week that Yukos intends to sue whoever was involved in the acquisition of the Yugansk unit. Here are earlier posts on the Yukos case and the Russian government’s auction.
Inasmuch as the deadline for Rosneft’s purchase of Yugansk is January 2, the S&P cautionary assessment reflects the marketplace’s skepticism that Rosneft will be able to raise the billions in financing necessary to close the deal that quickly.