The future of Yukos, Russia's largest private oil company, looked increasingly bleak last night after it admitted it had defaulted on a $1bn (£547m) bank loan and that immediate repayment was unrealistic.
The bombshell came in a crunch week for Yukos, which is facing a Wednesday deadline to pay a $3.4bn tax bill which it says it cannot honour immediately because its assets are frozen. Bruce Misamore, its chief financial officer, said: "Actions of representatives of the Russian government have led Russia's most credit-worthy company to the brink of an unintended and artificial situation of possible bankruptcy, creating a ridiculous situation of default on its bank loans at a time when the company is experiencing the best results in its history."
Most Western observers feel that Yukos is being persecuted by the government for the perceived sins of its jailed former chief executive Mikhail Khodorkovsky. Still a principal shareholder in Yukos through his holding group Menatep, Mr Khodorkovsky incurred the wrath of the Kremlin when he began taking an interest in opposition politics. He is currently standing trial for fraud and embezzlement in a case which critics have claimed is politically motivated.
The legal onslaught on his company appears to be reaching a critical stage with pressure on Yukos mounting daily. The company's offices were raided again on Saturdayand important files carted off. The authorities have also warned that Yukos will be served with another back tax bill for $3.4bn.
Yukos sources said the company may have to start scaling back production as analysts moved to downgrade its battered shares and news leaked out that minority shareholders are suing executives for misleading them.
There was a crumb of hope for the company, however, when Société Générale, the head of the creditor consortium that arranged the $1bn loan, said it would not demand immediate payment. But United Financial said it was pessimistic about Yukos's future. "The escalation in the brinkmanship between the state and Menatep suggests neither side will flinch, pointing to contentious asset sales dragging on for months," it said in a research note.