Ukraine's Supreme Court rules for Ferrexpo on sale of 40% Poltava Mining stake

MOSCOW. April 21 (Interfax) - The Supreme Court of Ukraine on Wednesday ruled in favour of Ferrexpo in its years-long dispute with the former shareholders of its largest Ukrainian asset, Poltava Mining, over the validity of the share purchase agreement for 40.19% of shares in the iron ore miner.

The court overturned a ruling by the Severny commercial appeals court that declared the 2002 agreement on the sale of a 40.19% stake in Poltava Mining to companies affiliated with Konstantin Zhevago, a major shareholder of Ferrexpo, to be invalid, Ukrainian media reported, citing a statement from the Grand Chamber of the Supreme Court. The Supreme Court also overturned the appeals court ruling to hand this stake back to the former shareholders, four companies from the VS Energy group: Gilson Investments, Calefort Developments, Emsworth Assets and Trimcroft Service. The Chamber issued the ruling on April 19.

The materials of the case showed that Trimcroft, which previously owned 9.32% of Poltava Mining, filed a lawsuit seeking to invalidate the purchase-sale agreement for the shares concluded by it, as well as Calsfort, Emsworth and Gilson as the sellers, and Eastcoast United Inc., Statex Corp., Newport Inc. and Sayers Holdings Limited as the buyers. PJSC Business Partners and JSC Ing Bank Ukraine are also parties to the agreement as regards the rights and interests of Trimcroft to Poltava Mining shares.

Calsfort, Emsworth and Gilson also went to court to dispute the agreement and claim rights to the shares. They asked the court to seize Poltava stakes of 12.1378%, 12.1378% and 6.5946%, respectively, from Ferrexpo and order depositories to transfer them to their accounts.

The court where the case was first heard, the Commercial Court of Kiev dismissed the lawsuits, but the Severny appeals court overturned this ruling and ruled partially in favour of the plaintiffs. It found the agreement to be invalid in the disputed part, seized stakes from Ferrexpo for the benefit of Calsfort, Emsworth and Gilson and ordered depositories to transfer the shares to their accounts, but dismissed the rest of the claims.

The Grand Chamber of the Supreme Court said it ruled partially in favour of the appeals of Business Partners and Ferrexpo AG, overturning the appeals court ruling and changing the reasoning portion of the first instance court ruling while leaving the other part unchanged. The full text of the ruling has not been published yet.

The shares in Poltava Mining claimed by the claimants, which in 2002 amounted to 40.19%, now represent 8.5% of Poltava Mining's share capital, "taking into account the dilutive effect from the numerous share capital increases made by" Ferrexpo since 2002, the latter said in its annual report.

Ferrexpo wholly owns Poltava Mining and Yeristovo Mining, and owns 99.9% of Belanovo Mining.

A Ukrainian court recently froze Ferrexpo's stakes in these three companies in a government lawsuit against Ferrexpo's largest beneficiary, Konstantin Zhevago. Soon after this, the group announced that Zhevago's stake in the company had dropped below a controlling interest, to 49.5% from 50.3%.