Court rejects YUKOS request to stop Rosneft IPO

A British court has rejected a request by embattled Russian oil group YUKOS to halt the London flotation of state-owned rival Rosneft. The UK High Court on Tuesday rejected YUKOS’s application for a judicial review of the Financial Services Authority's decision to admit Rosneft shares for trading on the London Stock Exchange on Wednesday.

Mark Howard, representing Rosneft, said YUKOS largest shareholder, GML Ltd., knew about the IPO in November 2005 and should have filed complaints then, the Associated Press reported.

Lawyers for YUKOS argued the flotation would amount to money laundering as the company's value was largely based on the unlawful seizure and sale of YUKOS’s main producing arm, Yuganskneftegaz, in December 2004. The forced sale was in violation of Russian law and the European Convention for Human Rights, and Yuganskneftegaz was sold at a massive discount, YUKOS says.

On July 13, the London Stock Exchange said the UK High Court had received a request to impose a temporary injunction on the Rosneft IPO in London. It was later reported that the case had been brought by YUKOS.

Rosneft shares are due to begin trading on the London Stock Exchange on Wednesday. They debuted on the Moscow stock market on Monday, losing 1.7 percent of their value on the first day of trading. After the IPO and the subsequent asset consolidation, the company’s capitalization will rise to $79.8 billion.

On July 14, Rosneft said it expected to raise $10.4 billion in the IPO, Roesneftegaz selling 1.1 billion Rosneft shares worth $8.5 billion, and Rosneft floating 253.9 million global depositary receipts (GDR) worth $1.9 billion. Additionally, advising banks - ABN AMRO Rothschild, Dresdner Kleinwort Wasserstein, JPMorgan Securities Ltd., Morgan Stanley & Co. International Limited, and Sberbank of Russia - were granted an option to buy 400 million shares.

Demand from investors pushed the price toward the high end of the range, to $7.55 a share. Rosneft will use the IPO revenue to cover the $7.5 billion of debt that Rosneftegaz raised last year to buy 10.7 percent of Gazprom, as well as the $1 billion of capital gains tax after the share sale, other debt payments, capital investment and corporate programs.

Rosneft President Sergei Bogdanchikov said three investors had purchased 23 percent of the IPO shares: Britain’s BP bought 9 percent worth $1 billion, Malaysia’s Petronas acquired 10 percent worth $1.1 billion, China’s CNPC purchased 4 percent worth $500 million. Russian retail investors bought $755 million worth of Rosneft stock.  (Source: www.rbc.ru)