Petropavlovsk calls foul over boardroom oustings

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Petropavlovsk has asked UK regulators to investigate the ousting of more than half its directors by a group of investors, which has plunged the FTSE 250 gold miner back into boardroom turmoil despite its recent share price surge. 

The company’s shares dropped 18 per cent on Tuesday after UGC, a privately owned rival run by Russian billionaire Konstantin Strukov, and three other shareholders voted against the re-election of seven board members at the Russia-focused mining group, including co-founder and chief executive Pavel Maslovskiy.

Petropavlovsk said it believed the outcome of the vote had been orchestrated by UGC, which acquired a 22 per cent stake this year, and Nikolai Lustiger, a businessman it said represents the interests of two other shareholders.

“The board believes that the current results have been achieved in a manner which is neither transparent nor fair to shareholders; and would be hugely damaging to the corporate governance and executive management . . . and accordingly to the interests of the company’s shareholders and stakeholders,” it said in a statement.

Mr Strukov, who is estimated by Forbes to have a $2bn fortune, did not immediately respond to a request for comment. Petropavlovsk issued a statement last month saying it was not in takeover talks with UGC following press speculation.

The boardroom upheaval is a blow for Petropavlovsk, which finally looked to have turned the corner after years of shareholder infighting and revolts. 

The company has just started to reap the benefits from a new processing plant, which allows it to refine refractory ore, a type of gold that is difficult to extract but abundant in Russia.

Boosted by rising production and a higher gold price, its shares have surged 100 per cent this year. The company joined the FTSE 250 index in March and was set to announce a capital allocation and dividend policy before the latest events.

Interim chief executive Alya Samokhvalova said Petropavlovsk has asked the UK Takeover Panel to investigate whether the four investors — who controlled 39 per cent at the time of voting — were acting in concert. One of them, an investment vehicle owned by Vladislav Sviblov, sold most of its 4.6 per cent stake after casting its vote.

Neither the Takeover Panel nor a representative of Mr Sviblov immediately responded to a request for comment.

“If this new shareholder [UGC] is interested in our assets, which is understandable, they will have to pay an adequate premium to all shareholders not just taking control of the company through the back door,” said Dr Samokhvalova,

Until the company is able to arrange another shareholder meeting, which it plans to hold within three months, the company has appointed four temporary directors to its board, including Peter Hambro, who founded the company with Mr Maslovskiy in the early 1990s.

Mr Hambro — who has been reinstated as chairman — was forced out of the company in 2017 following a shareholder revolt backed by Russian billionaire Viktor Vekselberg.

Analysts at Peel Hunt said the ousting of more than half the board had the feel of a coup, aimed at giving UGC control of Petropavlovsk without paying a takeover premium.

“We feel this is a coup aimed at securing control of the one refractory ore processing hub in Russia that has spare capacity, a highly strategic asset given the large number of refractory ore deposits in the country,” they said.

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