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Yukos stocks are worthless?

Citigroup Inc. said there's a 90% chance shares of OAO Yukos Oil Co., once Russia's biggest company by market value, will be worthless. Citigroup said in a research note today that Yukos has liabilities of $16.7 billion, mainly federal tax claims, and $21.7 billion of divestible assets, making each share worth $2.20. The company may receive another $13 billion in tax claims, which would render the stock worthless. „We see an increase in the chances of a scenario where no residual value is left for minority shareholders,” Citigroup said in the note. „This could happen in case of additional claims being confirmed or the sale of Yukos's assets at below market valuations at future auctions.”

A Moscow judge will decide as early as Aug. 1 whether to liquidate Yukos, which once had a market value in excess of $40 billion, at the request of creditors. The creditors, led by tax authorities and state-run oil company OAO Rosneft, last week rejected a plan to save the company put forward by Yukos management. Yukos shares fell 2.4% to 82 cents as of 1:11 p.m. in Moscow, after earlier gaining as much as 11% amid speculation an unidentified investor will buy the company and pay off its debts. „It's a real casino where the bets are high, and the downside price for the shares is zero,” said Oleg Vorotnitsky, head of equity trading at Uralsib Financial Corp. in Moscow. The shares soared 50% yesterday after Yukos Chairman Viktor Gerashchenko said an investor is offering to save the company, without identifying the possible savior. Citigroup cut its estimate for the stock to 22 cents from $1 and raised the probability of the shares going to zero to 90% from 72%. It reiterated a „sell” rating on the stock.

Last week, Steven Theede quit as Yukos boss after denouncing the creditors' meeting as a "sham". Yukos has struggled to survive after a series of tax demands totalling $27bn. It says the demands are linked to a political campaign against its founder, Mikhail Khodorkovsky, who is currently serving a long prison sentence in Siberia. In 2004, the back tax bill led to Yukos' main Yuganskneftegaz subsidiary being expropriated by the government and sold off at auction - to be ultimately acquired by Rosneft. The sale led to a legal challenge from Yukos when Rosneft floated on the London Stock Exchange. In his resignation letter, Mr Theede said the creditors' meeting would be "attended by those who are intent on destroying the rest of Yukos and taking its assets with no serious consideration being given to our financial restructuring plan". He added that he had been told court-appointed bankruptcy manager, Eduard Rebgun, had prepared a report for the creditors stating that a financial restructuring was impossible and the company should be liquidated. (BBC News, Bloomberg)