Yukos - The Fall of a Russian Oil Giant
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Case Code: ECOA114 Case Length: 14 Pages Period: 2000 - 2003 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.300 Organization : Yukos Industry : Oil and Energy Countries : Russia Themes: - |
Abstract Case Intro 1 Excerpts
Introduction
OAO Yukos Oil Company (Yukos) was Russia's second largest company with a market capitalization of US$31billion in 2003. Yukos produced 20% of Russia's oil and accounted for 6% of its GDP. In 2002, Yukos was the only Russian company amongst the world's top ten oil and gas majors. In the mid-1990s, Yukos had adopted western management practices under the charismatic leadership of Mikhail Khodorkovsky. The company seemed to have a bright future. But in mid-2004, Khodorkovsky was in jail, even as Yukos faced a deep liquidity crisis. The Arbitration Court of Moscow had asked the oil company to pay RUR 99.3bn, or about $3.4bn for the year 2000, in back taxes and fines before 7th June 2004. The company failed to pay the amount before the deadline. On July 2, Yukos defaulted on a $1 billion loan provided by a group of banks led by Societe Generale. The court froze most of Yukos'assets and accounts. Under these circumstances, the company warned investors that it could be driven into bankruptcy with in few weeks. This announcement sent shock waves in both domestic and international oil markets. Yukos share prices fell across the board and world oil prices soared (Figure (i)). The Yukos announcement also prompted leading international rating agencies to ring alarm bells over Russia's overall economic and political performance...
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