Yukos postpones Eurobond sale

Nov 22, 2003 01:00 AM

Yukos Oil, Russia's biggest oil producer, delayed a sale of $ 1 bn in Eurobonds, helping it meet a goal of keeping debt below $ 5 bn this year. The sale was postponed because of "unattractive" market conditions, Yukos CFO Bruce Misamore said. Russian Eurobonds have fallen about 7 % since this year's high on June 16.
"We will try to sell Eurobonds if the conditions in the market, the pricing and the terms become acceptable," Misamore said. Earlier, Misamore said Yukos may borrow as much as $ 3 bn to retire debt and help finance the $ 13.9 bn purchase of Sibneft, Russia's fifth-largest oil producer.

Yukos bought 92 % of Sibneft in October in a transaction that created the world's sixth-largest publicly traded oil producer behind ExxonMobil, Shell, BP, Total and ChevronTexaco. Yukos will make an offer to the remaining shareholders, Misamore said.
The oil producer plans to give shareholders who together own about 8 % of Sibneft the opportunity to sell their stock on terms "similar or identical to what majority shareholders received," Misamore said. "We are not going to issue that buyout offer until the end of the year."

Yukos and Sibneft agreed on May 14 the merged company's net debt at the end of the year shouldn't exceed $ 5 bn and that the two companies' contributions to that figure should be in proportion to their relative value in the new entity. Yukos has $ 2.6 bn in debt and expects that of Sibneft to total $ 1.5 bn at the end of the year, Misamore said.
The company borrowed $ 1.6 bn this year from Societe Generale. It also got a $ 1 bn loan arranged by a group of banks led by Societe Generale, and may extend that by another $ 500 mm, "if conditions get better," Misamore said. Yukos intended to raise additional cash through a combination of bank loans and a sale of Eurobonds denominated in dollars.

Source: Bloomberg
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