TRANSPETROL NEGOTIATIONS OFF TO SLOW START

C O N F I D E N T I A L SECTION 01 OF 03 BRATISLAVA 000631 SIPDIS SIPDIS E.O. 12958: DECL: 11/27/2017 TAGS: ENRG ECON EPET PREL LO RS SUBJECT: TRANSPETROL NEGOTIATIONS OFF TO SLOW START FOLLOWING FAVORABLE COURT DECISION REF: A. BRATISLAVA 561 ¶B. MOSCOW 5350 BRATISLAVA 00000631 001.5 OF 003 Classified By: Deputy Chief of Mission Lawrence R. Silverman for reason s 1.4 b) and d) ¶1. (C) Summary - As a result of the October 31 Dutch Court decision that returned control of Yukos Finance (YF) to the Khodorkovsky-appointed directors Dave Godfrey and Bruce Misamore, YF and Slovak government officials have restarted negotiations that were halted in 2006. The court decision will certainly be contested by Monte Valle, the American-led investment group that purchased the stake from Yukos Oil in a Moscow auction in August, but even the Slovak Government now recognizes that the situation has again shifted and Godfrey and Misamore are once again the recognized representatives of YF. The November 20 meeting between Economy Minister Lubomir Jahnatek and YF representatives did not achieve the aim of rebuilding goodwill and kickstarting more detailed negotiations. Each side left frustrated, feeling that the other was inflexible in its position and unwilling to engage in a constructive dialogue. The GOS knows that it will regain management control whether it buys back the stake or if it is sold in an auction, but the buyback remains the least risky option and would finally give the government the control it has sought for the last 16 months. End Summary. KHODORKOVSKY-APPOINTED DIRECTORS REGAIN CONTROL OF YUKOS FINANCE -------------- -------------- ¶2. (U) In a much-anticipated October 31 court decision, the District Court of Amsterdam returned control of YF to the Khodorkovsky-appointed directors Godfrey and Misamore. The successful appeal overturned an August 11, 2006, decision that had given the Russian court-appointed Yukos receiver Eduard Rebgun control of Yukos Finance. The Amsterdam court ruled that the Russian bankruptcy order that had appointed Rebgun as the bankruptcy trustee was not in accordance with Dutch principles of due process, and thus cannot be recognized. All actions taken on behalf of Yukos Finance by Rebgun, including the appointment of Shmelkov and Hogerbrugge as directors, were deemed null and void by the 10/31 decision. ¶3. (SBU) The sale of the 49 percent stake in the Transpetrol pipeline has been held up since the August 2006 decision over competing claims to the asset by Godfrey and Misamore, who maintained control of the YF daughter company Yukos International (YI),and Rebgun. After the positive court decision, Godfrey and Misamore are moving quickly to regain control of YF and to lay the groundwork for an eventual sale. As a first step they need to get themselves re-appointed as the official directors of the company and have their names put back on the Dutch Commercial Registry, which is the official document that the Slovak Government refers to in determining who can represent YF's shareholders' rights at Transpetrol shareholders' meetings. Godfrey and Misamore have appealed to the court for this to happen and expect the issue to be resolved by the end of December, according to local YF representative Jan Kridla. BUT LEGAL HURDLES REMAIN --------------