RUXX: Russian Court to Freeze Patarkatsishvili's Heirs' Assets in
Ukraine and the Balkans
NEW YORK, Nov. 15, 2012 /PRNewswire/ -- Russian
authorities continue imposing injunctions against international
assets of Salford Capital Partners, a company controlled by Russian
businessman Boris Berezovsky and
heirs to his diseased business partner B. Patarkatsishvili. In the
meantime, on November 6, a Ukrainian
court in Lvov authorized the arrest of the company's Ukrainian
assets following a tax audit that indicated that the company may
have engaged in illegal tax evasion and now owes hundreds of
thousands of dollars in back taxes and fines. The Company's assets
in the Balkans were seized earlier this year. The asset freeze may
prevent sale of Salford's assets which include well-known and
respected Balkan brands Bambi and Knyaz Milos, according to the
analysis by RUXX Index, which tracks Russian stocks and capital
flows.
However, Salford plans to challenge the latest court injunction,
according to the head of their Ukrainian operation Marko Tkachuk. In their press release,
Salford claims that each day of just one of the company's Ukrainian
plant costs the company more than the full amount of tax claims,
and is overall sanguine about the prospects of court injunction
getting lifted.
In September 2012, the Samara
Region of Russia (home to a major
Russian automaker) filed a suit against Berezovsky with a UK high
court seeking more than USD 300
million in damages. A Russian court has seen merit in the
suit previously, ruling that the exiled tycoon should pay
compensation for damage he caused to the Russian region in the
1990s.
Salford Capital Partners' assets were offered for sale earlier
this year. TPG Capital, the Russian Private Equity Fund, Klever
Asset Management and Sistema were named among possible prospective
bidders. However, many potential buyers stepped away from the deal
after finding out that IDS Borjomi was ultimately controlled by
Berezovsky and Patarkatsishvili's heirs who are currently under
criminal investigation. The police searched the offices of Borjomi,
a company controlled by Salford, in September 2012.
Salford owns several mineral water brands and bottlers in
Ukraine: Morshinskaya,
Myrhorodskaya, Truskavetskaya, Stary Myrhorod, Sorochinskaya;
Borjomi mineral water springs in Georgia, and Bambi and Knyaz Milos plants and
brands in the Balkans.
"The actions of Russian authorities are logical: they seize
Salford's international assets pursuant to a court order, and
cooperate with prosecutors in Ukraine and the Balkans through regular
channels. They may well establish control over the company's
assets," RUXX Analyst Ilya Lushnikov
believes. "The optimism of the company's Ukrainian management may
prove to be misplaced, as the claims against Salford mount."
Analysts value some of these assets at more than USD 400 million. However, political and legal
risks associated with the asset may be overwhelming. "Buying an
asset that is likely to be seized under a court order would come
with very significant risks and may make sense only for a buyer
enjoying support of the Russian authorities, which would provide
insurance against an asset freeze. This is hardly a suitable
investment for investment funds. There is a very real risk of being
sued by the funds' own shareholders over a highly speculative
investment," says Lushnikov. "Salford also has substantial assets
in several Balkan countries whose treaties with Russia are likely to entail an asset freeze in
the Balkans as well."
RUXX is a Dow Jones-calculated index tracking Russian equities
traded overseas.
RUXX Index
www.ruxxindex.com
Ilya Lushnikov
ilya.lushnikov@ruxxindex.com
+1 917 475 6452
SOURCE RUXX Index