S&P: Sibneft on negative watch

Standard & Poor's said it revised the implications of the CreditWatch status of its B long-term corporate credit rating on Russia-based OAO Siberian Oil Co. (Sibneft) to negative from developing.

The revision reflects S&P's concerns about potential implications for Sibneft of the fiscal and legal pressures on Sibneft's 92% shareholder, OAO NK Yukos (CCC/Watch negative/--). These have been mounting following the court decision on a $3.4 billion tax claim against Yukos (subject to an appeal) and a freeze of the company's assets (including its 92% stake in Sibneft).

"This raises uncertainty over Sibneft's status in the event of a Yukos default or bankruptcy, further complicates the reversal of the Sibneft takeover by Yukos, and increases uncertainty over Sibneft's shareholding structure," said S&P credit analyst Elena Anankina. "If Yukos were allowed by the court - which is not currently the case - to sell its stake in Sibneft (fully or partially) to pay taxes or debt, we would be concerned that Sibneft might increase its leverage considerably to finance a stock repurchase by the company or its former shareholders."

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