/ 20 July 2006

Yukos chief quits after liquidation proposal

The president of Russian oil company Yukos, Steven Theede, announced his resignation on Thursday, saying that a court-appointed bankruptcy observer had recommended liquidation of the business.

”I am notifying you of my resignation as president. There is now nothing more to be accomplished by me that could benefit the company in a material way,” Theede said in a statement.

The bankruptcy observer, Eduard Rebgun, had not allowed Theede to see a copy of his report on the company, but, Theede said: ”I am told he concludes the company is only worth $15-billion [one third of its external appraised value] and has debts in excess of $17-billion.

”I am told that he concludes that financial restructuring is impossible and liquidation is the only viable alternative,” Theede said in the statement addressed to Yukos’ board of directors before a meeting of creditors due later on Thursday.

The departure of Theede, appointed as chief executive officer in 2004, came after a failed bid by Yukos in a British court to block the partial stock market floatation of Rosneft, which Yukos executives accuse of stealing Yukos’ main production arm,

Yuganskneftegas, in 2004.

”As a result of the decision … to allow the Rosneft initial public offering to proceed, I have exhausted all possibilities that I can personally control to either preserve or recover value for the company as a result of the expropriation of Yuganskneftegas,” Theede said.

Yukos, once the biggest Russian oil producer, was dismembered in the courts in 2003/04 and last year its founder Mihkail Khodorkovsky was sentenced to eight years in a Siberian prison for financial crimes.

Khodorkovsky’s supporters accused the Kremlin of unleashing a politically driven campaign against him and the company.

While recommending that Yukos should go to the European Court of Human Rights to pursue its case over Yuganskneftegas, Theede said such a process did not justify his staying on. – Sapa-AFP