RUSSIA - Oct 14 - Yukos Unit To Be Sold For Knock-down $4 bn.

The government appears to be preparing to sell the main asset of Yukos, the country's embattled oil company, for as little as $4 bn - a fraction of its fair value - in a move analysts branded as "daylight robbery" and a "worst-case scenario". In what seemed to be a government leak, news agency Interfax said the government will auction 76.8% of Yuganskneftegas, which had been valued by Dresdner Kleinwort Wasserstein at between $14.7 bn and $17.3 bn. The 76.8% stake represents 100% of the voting shares in Yuganskneftegas. One person close to the situation confirmed that this was among the options put forward by the Ministry of Justice, which had seized Yuganskenftegas in lieu of its back taxes. But one state official cautioned that: "Nothing has been finalised yet". A senior government official quoted by Interfax said Gazprom, the state gas monopoly that had recently announced its merger with a state-owned Rosneft oil company, could bid for the asset. A sale at that price to a state monopoly would devastate the Russian market, demonstrate the disregard for the rights of minority shareholders, and in effect put an end to the existence of Yukos as one of Russia's largest oil producers. The plan to sell Yuganskneftegas - a wholly owned subsidiary of Yukos that produces 60% of all its oil - brings to a head a year-long offensive against the company and its shareholder, Mikhail Khodorkovsky, who is standing trial for tax evasion and fraud. Yukos's chief financial officer Bruce Misamore, called the plan "a grossly deficient value of assets". In spite of Oct 14 leak, it is believed that Russian Federal Property Fund, which must administer the sale, has not yet definitively set the price or the size of the stake. Some observers suggested the leak was designed to test public opinion and "shoot" down the auction at the knock-down prices. It comes at a time when Vladimir Putin, who is believed to have given a green light for the attack on Yukos, is on an official visit to China. This gives him an opportunity to distance himself from a sale or to come to the rescue of investors. Earlier this week the Ministry of Justice said it would sell Yuganskneftegas to cover Yukos's tax arrears which it estimated at $3.73 bn. The head of the Moscow Ministry of Justice Alexander Buksman, said: "it was decided to sell the company that would cover most of this arrear". However Yukos's total tax bill now exceeds $8.5 bn. Steven Dashevsky, an oil and gas analyst at Aton, the Russian brokerage, said: "The $4 bn would barely cover a part of Yukos's bill. This suggests that the government could take and sell other Yukos's assets as well". In a report made public despite its heading "strictly private and confidential", DrKW says that "in its professional opinion, the equity-value range of Yuganskneftegas could be between $14.7 bn and $17.3 bn, taking into consideration all of the company's present and potential tax liabilities. The plan is based on a 60% discount to an "overly conservative" valuation of $10.4 bn set by DrKW.