VZCZCXRO0388
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #5173/01 2991327
ZNY CCCCC ZZH
P 261327Z OCT 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 4879
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RUEHSL/AMEMBASSY BRATISLAVA PRIORITY 0220
RHEHNSC/NSC WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005173 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT 
DOE FOR HARBERT, HEGBORG, EKIMOFF 
DOC FOR 4231/IEP/EUR/JBROUGHER 
NSC FOR MCKIBBEN 
 
E.O. 12958: DECL: 10/25/2017 
TAGS: EPET ENRG ECON PREL RS
SUBJECT: (C) YUKOS FINANCE BUYER: NO PRE-ARRANGED DEAL WITH 
ROSNEFT 
 
REF: A. BRATISLAVA 561 
     ¶B. BRATISLAVA 420 
 
Classified By: Econ MC Eric Schultz for Reasons 1.4 (b/d) 
 
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SUMMARY 
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¶1. (C) One of the major investors behind the August 15 
purchase of Yukos Finance assets at auction told us October 
23 that the investors hoped to "unwind" the various lawsuits 
and other claims against the company.  They planned to use 
the $1.5 billion in cash assets and the 49% stake in 
Slovakia's Transpetrol to settle the debt claims, leaving 
them with a substantial profit.  He added that the investors 
intended to sell the Transpetrol stake but had no 
pre-arranged deal with Rosneft.  End Summary. 
 
--------------------------------- 
VERY COMPLICATED, VERY PROFITABLE 
--------------------------------- 
 
¶2. (C) XXXXXXXXXXXX (Amcit, protect), XXXXXXXXXXXX of 
Renaissance Capital, confirmed October 23 that Renaissance 
and Amcit investor Richard Dietz were the financial backers 
of Monte Valle, the investment firm which bought Yukos 
Finance at auction on August 15.  Monte Valle's owner, Amcit 
Steve Lynch, had profitably purchased a previous Yukos lot. 
XXXXXXXXXXXX said Renaissance had been brought in by Lynch. 
 
¶3. (C) According to XXXXXXXXXXXX, the main assets of Yukos 
Finance are about $1.5 billion in cash and a 49% stake in 
Slovakia's Transpetrol, which XXXXXXXXXXXX indicated has a market 
value of $100-150 million.  Those assets are currently tied 
up in lawsuits, including especially a suit by Yukos 
International (former Yukos Finance) directors Dave Godfrey 
and Bruce Misamore, both Amcits, who are claiming the Yukos 
bankruptcy proceedings were illegitimate.  The assets are 
also offset by debt claims from creditors Rosneft and another 
investment group, Menatep (reftels). 
 
¶4. (C) XXXXXXXXXXXX said Monte Valle already has an agreement in 
place with Rosneft and Menatep to settle the debts and drop 
various related lawsuits.  He said it would cost about $1.25 
billion to retire the debts.  In addition, a Dutch court is 
expected to rule on October 31 on Godfrey and Misamore,s 
suit.  If the investors are able to successfully "unwind" the 
various claims and lawsuits, and to sell the Transpetrol 
stake for market value, XXXXXXXXXXXX said they stand to make a 
profit of $50 - $100 million on their approximately $300 
million investment in the purchase. 
 
------------------------- 
SELLING TRANSPETROL STAKE 
------------------------- 
 
¶5. (C) XXXXXXXXXXXX said that contrary to widespread speculation, 
Monte Valle had not been acting as a proxy for Rosneft and 
the deal in place was simply to settle the debts and related 
lawsuits.  There was, for instance, no agreement to sell or 
turnover to Rosneft the pipeline stake.  That said, none of 
the investors were interested in keeping the asset.  On the 
contrary, XXXXXXXXXXXX said, they needed to sell it for a 
"material sum" to realize their profits.  Rosneft was a 
potential purchaser of the stake, but it was just one of many. 
 
¶6. (C) XXXXXXXXXXXX said that given the continuing uncertainties 
surrounding Yukos Finance's assets, the investors have yet to 
focus on the sale of the stake in Transpetrol.  He indicated 
the investors were wary of the political interest in the 
pipeline stake.  They might be interested in a "negotiated 
solution" (as suggested in ref A) but only at a market price. 
 Moreover, they were also sensitive to the reaction of the 
Russian government. 
 
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COMMENT 
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¶7. (C) The investors are planning on a quick and profitable 
deal and in that regard selling the Transpetrol stake for 
market value would seem to be a key.  They are therefore 
unlikely to be willing to sell to anyone at a discount and 
would not want politics to interfere in their purely 
commercial affair.  On a general note, this complex deal is 
typical of Yukos "auctions."  The owners, purchasers and 
details all tend to be very opaque, often deliberately, and 
all involved tend to profit handsomely from the demise of 
Yukos.  End Comment. 
Burns