A Russian court froze around $1.7 billion of conglomerate Sistema‘s assets following a claim by oil major Rosneft on Tuesday, escalating a long-running dispute that has reignited concerns about the investment climate in Moscow.
Rosneft is looking to place on hold some of Sistema’s assets as part of a second lawsuit over the state-controlled group’s Bashneft arm. The arbitration court of Bashkortostan froze a number of the conglomerate’s assets, including its stake in Detsky Mir — a toy retailer with a book value of around $571 million.
Sistema’s shares slipped 4.5 percent on the news, while Detsky Mir’s shares were trading under pressure Wednesday morning.
The ongoing legal battles between the pair, two of Russia’s biggest businesses, stem back to 2009 when Bashneft’s dividends were under the control of Sistema through to 2014.
In August, a court ruled Sistema should pay Rosneft compensation of more than 136 billion roubles ($2.3 billion) in connection to a dispute over Bashneft. Rosneft, which bought Bashneft last year, has accused Sistema — the oil producer’s previous owners — of removing some of its assets.
Sistema’s President and CEO Mikhail Shamolin has dismissed allegations his company stripped assets from Bashneft, telling CNBC earlier this year that the claim was “pretty much baseless.”
Russian President Vladimir Putin unexpectedly waded into the legal wrangling in September as he called for both companies to find an “amicable agreement.”
In another lawsuit, Rosneft — the integrated oil company that is majority-owned by Putin’s government — has been seeking damages of $2.2 billion from Sistema. In response, Sistema filed a $5.6 billion lawsuit of its own against Rosneft.
Russian court freezes .7 billion of Sistema assets at request of Rosneft