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19 Jul, 2006 04:45

YUKOS fails in court bid to block Rosneft

YUKOS fails in court bid to block Rosneft

A British court dismissed the bid by Russian oil firm YUKOS to block the start of trading in Rosneft oil equities on the London Stock Exchange.

The High Court rejected the Yukos case against the Financial Services Authority, seeking to stop listing of Rosneft global depository receipts on the London exchange. Yukos representatives said the case fell on a technical point of law and that the claim will be pursued at the European Court of Human Rights.

Yukos had argued that the $10.4 billion Initial Public Offering (IPO), the biggest ever in Russia, amounted to a sale of stolen property. It claimed Rosneft's main producing asset, Yuganskneftegas, was formerly the core arm of Yukos, once Russia's largest oil company.

UK financial regulators did not take this into account when approving the float, Yukos argued, and therefore did not follow correct procedures. Rosneft is now due to start its London listing on Wednesday, as scheduled.

Meanwhile, Rosneft expects net profit from its IPO to reach more than $1.8 billion. The company plans to spend the money on debt repayment, financing its investment programme and corporate infrastructure. But so far, the share price has not done particularly well. At the close of Russia Trading System second day business in Moscow, Rosneft shares dropped a further 0.27 per cent to $7.40.

The price has dropped over the course of two trading days, in line with the market, after opening at $7.55. Ahead of trading, Rosneft said BP, Malaysia's Petronas and China's CNPC, along with an unnamed company, had taken almost half the shares on offer.