Nov. 15, 2012
/PRNewswire/ -- Russian authorities continue imposing injunctions against international assets of Salford Capital Partners, a company controlled by Russian businessman
and heirs to his diseased business partner B. Patarkatsishvili. In the meantime, on
, 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
. 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.
, the Samara Region of
(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
Salford owns several mineral water brands and bottlers in
: Morshinskaya, Myrhorodskaya, Truskavetskaya, Stary Myrhorod, Sorochinskaya; Borjomi mineral water springs in
, 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
and the Balkans through regular channels. They may well establish control over the company's assets," RUXX Analyst
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
are likely to entail an asset freeze in the Balkans as well."
RUXX is a Dow Jones-calculated index tracking Russian equities traded overseas.