24 Jun 2009 15:14

Ukrtatnafta planning to offer 18.3% stake at auction on June 27

MOSCOW/KYIV. June 24 (Interfax) - Ukraine's Ukrtatnafta (Kremenchug Oil Refinery) is planning to sell 18.296% of its shares - a stake whose ownership has been highly contested in recent years - at an open auction on June 27 as part of a court order that Russia's Tatneft argues has been suspended.

Ukrtatnafta has sent all its shareholders a proposal on participation in the auction, a source with knowledge of the situation told Interfax. The company's press service, meanwhile, told Interfax that "certain work is being carried out in this direction," but declined to provide further details.

Naftogaz Ukrainy, which owns a 43.054% stake in Ukrtatnafta, declined comment on the report, as did Fuel and Energy Minister Yuriy Prodan.

A source at Russia's Tatneft told Interfax that the company had received notification from Ukrtatnafta about the auction, although Tatneft believes the auction is illegal. "If the auction is held, it will be held illegally," the source said.

The source said the company had only learned a ruling by the Poltava regional court forcing Ukrtatnafta to sell the 18.296% stake to its shareholders at the end of May. Tatneft and Naftogaz then filed appeals with the Higher Economic Court of Ukraine, which suspended the lower court's ruling.

In addition, under the Ukrtatnafta charter, it is the company's supervisory board that must make a decision on the sale of shares that have been declared as unpaid. The auction was thus called solely on the basis of a court ruling that has been suspended. "The court ruling has been suspended and the auction is illegal," the source said.

The source also said that the shares are to be sold in a single lot at the auction. "The terms of the auction are such that Ukrtatnafta and basically the Privat group are fully controlling the access of participants to the auction," the source said.

CJSC Ukrtatnafta was created based on decrees issued by the Ukrainian president and the president of the Russian Republic of Tatarstan in 1994. The company was set up on the core of the Kremenchug Oil Refinery, which has capacity to refine up to 18.6 million tonnes of crude per year. At present, the company's largest shareholders are Naftogaz Ukrainy with 43.054% and the Tatarstan property ministry with 28.7788%. The 18.296% stake was previously owned by Seagroup International Inc. (U.S.) and Amruz Trading AG (Switzerland).

The company has been unable to hold shareholders meetings for several years due to a conflict between three of its shareholders: the government as represented by Naftogaz, minority shareholders connected to the Privat Group and Tatarstan's property ministry.

Ukrtatnafta had net losses of 32.58 million hryvni in January-March 2009, or 72.2% less than in the same period of 2008. Sales revenue fell 39.9% to 1.763 billion hryvni in the period.