3 Apr 2024 17:19

Minority shareholders in Ukraine's Kernel challenge annual meeting decision in court

MOSCOW. April 3 (Interfax) - Eight minority shareholders of Kernel Holding S.A. (Luxembourg), the holding company for Ukrainian agricultural holding Kernel, have started litigation to suspend the decision of the annual meeting of shareholders on December 11, 2023.

"Kernel Holding S.A., a company registered in Luxembourg, announces that on March 29, 2024, it received a summons for an expedited procedure from a group of eight shareholders requesting a temporary suspension of the resolution adopted at the annual general meeting held on December 11, 2023," Ukrainian media reported, with reference to Kernel materials on the Warsaw Stock Exchange.

The grounds were that "certain shareholders were unlawfully denied participation in the general meeting and that the general meeting of shareholders was not held on the specified date at the registered office of the company in Luxembourg, as stated in the minutes of the meeting."

A preliminary hearing is scheduled for May 19, 2024.

The group's management "rejects the aforementioned allegations as being unfounded and is committed to complying with all relevant laws, regulations and best corporate governance principles in its decision-making process," the filing said.

"The company is determined to defend its position strenuously," Kernel said.

The meeting of Kernel shareholders on December 11, 2023, at which Namsen Limited, owned by Kernel founder and Andrei Verevsky, chairman of the board of directors, had 99% of the votes, voted against paying dividends for the 2023 financial year ending in June last year.

The meeting also increased the put option for management from 2,792,435 shares to 2,906,445 shares on the same terms, approved a new remuneration policy and released Viktoria Lukyanenko from the position of executive director at her request, introducing Sergei Volkov to the supervisory board in the same position.

A group of eight minority shareholders with a combined 0.4% of Kernel shares had appealed to a court in Luxembourg to challenge the board of directors' decision to delist the company and subsequent decisions on the additional share placement and Namsen's right to vote with shares from the new issue. The first preliminary hearing in one of the lawsuits was scheduled for March 18 but then rescheduled for the end of April.

In the lawsuit that disputes the board decision of April 13, 2023 to delist and buy back shares, the plaintiffs allege that the directors had a conflict of interests and lacked the necessary authority. As an alternative, the minority shareholders propose to appoint an expert to assess the fair price of the tender offer for shares Namsen announced on March 30, 2023, and assess the impact the boards' decisions, including regarding the delisting, had on the company's corporate interests.

The Polish regulator suspended proceedings in the delisting case until the court in Luxembourg issues a verdict.

Kernel's shares on the Warsaw Stock Exchange are currently trading at PLN9.05 ($2.27 at the current exchange rate).

Namsen Limited increased its stake in the group from 41.3% to 74.05% in a buyback offer announced in March 2023 with a view to subsequently delisting Kernel from the Warsaw exchange. As a result of an issue of 216 million new shares initiated by Verevsky in August 2023, Namsen acquired another 212.6 million shares and in November it acquired another 1.2 million, increasing Verevsky's stake to 94.37% of voting shares taking into account treasury stock.

In May 2023, Namsen bought Kernel shares at a price of PLN18.50 ($4.47 at the rate at the time) per share, while the company's IPO in 2007 was priced at PLN24 per share. The new share issue that was almost completely bought up by Namsen last August was placed at $0.2777 per share, and the buyout from minority shareholders last November was priced at $1.875 per share.

Kernel is one of Ukraine's largest producers and exporters of sunflower oil. The group also cultivates and sells other agricultural products.