If the assets of Gazprom arrested, the company’s capitalization will collapse

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Prime Minister of Ukraine Volodymyr Groysman instructed the justice of the country to coordinate the work with “Naftogaz” for the possible seizure of assets of “Gazprom” outside of Russia in case the Russian company will respect the verdict of the Stockholm arbitration court. Now, obviously, words will not suffice, and the shareholders of “Gazprom” became the main losers in the geopolitical confrontation between Russia and the West.
It should be noted that earlier Ukraine has publicly declared its intention to arrest the Russian assets, and lay claim to the property of the former USSR abroad. As you know, after the collapse of the Soviet Union, Russia has assumed all the assets and all foreign debts, the latter was partially paid, partially written off.
News of a possible seizure of assets of “Gazprom” abroad could be an important bearish factor for the capitalization of “Gazprom” on the next exchange trading. Probably the history will remind the situation with the former major shareholders of Yukos, who were trying to arrest the assets and had financial claims to the state “Rosneft” and directly to the Russian Federation.
In this position of the Ukrainian side look stronger. The bankruptcy of “Yukos” is a Russian domestic story. Tax optimization of “Yukos” was held under grey schemes, and the bankruptcy of the oil company was held strictly within the law. The assets were sold at fair prices, of course, taking into account the tax and debt of subsidiaries.
Today Kyiv has all the chances to create problems for operating and financial activities of “Gazprom” in Europe. Especially in terms of bond issuance and other debt securities. However, the chances of winning in dispute is small. From our point of view, the most likely scenario is intended to clear mutual claims of “Gazprom” and “Naftogaz”. In this corporate war could drag on for many years.
A rough estimate of the fair value of shares of Gazprom is about $8, the current price of the ADR is around $2,4. A discount of 70% is impressive. This is the price for Ukrainian risks, especially the risks of transit, sanctions against Russia and the risk of U.S. LNG to Gazprom’s markets. Shareholders “Gazprom” – the main losers in the geopolitical confrontation between Russia and the West.
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Alexander Razuvayev,
The Director of analytical Department,
Alpari