UPDATE 2: Sistema fights asset arrest, ruler finds massive Bashneft failures

(Rewrites)

UFA/MOSCOW, Jul 6 (PRIME) – Multi-industry holding Sistema struggled against arrest of its assets in the Bashkortostan Republic Court on Thursday, while the technical watchdog discovered about 3,500 violations at a plant belonging to its former affiliate Bashneft, according to a Sistema official and Rustem Khamitov, head of the republic.

At court, a Sistema representative argued that arrest of 185 billion rubles worth of its assets in a 170.6 billion ruble suit filed by oil major Rosneft, which bought Bashneft from it last year, was excessive and the company can easily cover all claims.

“Sistema assets’ book value amounts to 450 billion rubles under Russian Accounting Standards and 1.1 trillion rubles under International Financial Reporting Standards … The assets exceed the sum of potential recovery which invalidates the restrictive measures,” the Sistema representative said at a hearing in the Arbitration Court of the republic of Bashkortostan.

“The ruling was made by mistake, we think,” he said.

Last week, the arbitration court arrested assets, including a 31.76% stake in mobile operator MTS, 100% in healthcare company Medsi, and 90.5% in Bashkir Power Grid Company under the Rosneft case.

A Rosneft representative said that the company insists on maintaining the restrictive measures. “No new circumstances signaling that a need in restrictive measures has faded have arisen,” he said.

Rosneft filed its suit in May, seeking to recover a loss stemming from an alleged asset withdrawal from Bashneft in 2009–2014 by Sistema.

Khamitov said, “Revaluation of Bashneft’s plants equipment is taking place now. We all thought that its refinery was the best in the country, but inspection by the technological watchdog discovered about 3,500 violations. There are simple but important components that have to be worked on.”

Bashneft will have to spend about 40–45 billion rubles to eliminate the violations, he said.

The 18th Arbitration Court of Appeals representative Olga Fomichyova said that the court down Sistema’s appeal against a decision to attract the republic of Bashkortostan’s Ministry of Land and Property Relations as a co-claimant under the Rosneft suit because this procedural action cannot be appealed against.

(59.5787 rubles – U.S. $1)

End