Rosneft float at risk from $48bn legal claims

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Rosneft, the Russian oil group, warned yesterday of "a high degree of risk" to investors considering taking part in its London flotation, with $48bn (£27bn) of lawsuits ranged against it, stemming from its acquisition of the main asset of the rival Yukos.

Its prospectus listed four different lawsuits against it and exposure to "substantial liability" were Yukos shareholders to win a separate $33bn lawsuit against the Russian Federation.

The state-owned Rosneft unveiled the pricing for its initial public offering, which it hopes will raise more than $10bn - Russia's largest and its most controversial share offering. It will sell ordinary shares in Moscow but the bulk of the money will be raised by issuing global depository receipts (GDRs) on the London Stock Exchange.

Rosneft valued itself at $60bn to $80bn, with a price range for its shares put at $5.85 to $7.85. Its president, Sergei Bogdanchikov, said it sensed "a great interest" from potential investors and has already received bids "for a significant part of the shares placed, including from several big, strategic market participants". Marketing of the offering began formally yesterday.

In December 2004, Rosneft acquired Yuganskneftegaz, the main asset of the stricken Russian group Yukos, which claims it was forced to sell at a price far below its true value.

The prospectus said: "The disposition of these claims against Rosneft could adversely affect Rosneft's operating results and financial condition and could have a material adverse effect on Rosneft and the value of the securities. Rosneft has not provided for any of these claims in the financial statements, is actively contesting all such claims and intends to continue to contest them vigorously."

The company added that Rosneft could face additional claims related to its acquisition of Yuganskneftegaz as a result of the issue of GDRs.

In the prospectus, the first lawsuit listed is one in which Yukos is seeking $14bn damages over the auction. Secondly, holders of Yukos American Depository Receipts want $3m. Thirdly, a Yukos affiliate seeks $662m over a loan it advanced to Yuganskneftegaz. Fourthly, a Yukos subsidiary is seeking recovery of a $405m loan.

The prospectus said another case, filed by Yukos investors in The Hague and seeking $33bn in damages against the Russian Federation, "may expose Rosneft to substantial liability".

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