Former Poltava Mining shareholders start new dispute with Ferrexpo, this time over squeeze-out
MOSCOW. May 10 (Interfax) - Former minority shareholders of Poltava Mining, which is iron ore producer Ferrexpo's largest Ukrainian asset, are looking to recover debt of more than UAH 136 million or $3.7 million at current exchange rate arising from a squeeze-out in 2019.
Ukrainian media report, citing data from Ukraine's state register of court decisions, that two plaintiffs are trying to recover debts of UAH 51.7 million and UAH 84.4 million from Poltava Mining and Ferrexpo collectively. Appeal proceedings in this case were opened on April 20 by the decision of the Eastern Economic Court of Appeal.
The reason for the appeal was a ruling of February 15 by the Poltava Region's Economic Court, which granted a plea by Poltava Mining, reverting the case to the preparatory stage. The proceedings were also suspended until the Supreme Court considered another dispute between Ferrexpo and the former shareholders of Poltava Mining regarding the invalidation of the 2002 sale and purchase agreement for 40.19% of the company's shares.
After considering the case materials and the appeal, the panel of judges concluded that appeal proceedings should be opened in the case. The court gave the parties until May 15, inclusive, to respond to the appeal with evidence they had notified other participants in the case. In addition, the court decided to request case materials from the Poltava Region Economic Court.
Ferrexpo, which owned a 99.11% stake in Poltava Mining, bought out minority shareholders in a squeeze-out in 2019 and increased its stake in the company to 100%. The buyout price was UAH 34.24 per share with par value of UAH 9.96.
The Grand Chamber of the Supreme Court in April ruled in favor of Ferrexpo in its long-term litigation with former shareholders of Poltava Mining to invalidate the sale and purchase agreement for 40.19% of the company's shares. The Chamber quashed a ruling by the Northern Economic Court of Appeal to invalidate the 2002 agreement on the sale of 40.19% of Poltava Mining to entities associated with Konstantin Zhevago, a major shareholder of Ferrexpo; and a ruling by the Economic Court of Appeal to hand this stake back to the former shareholders Gilson Investments, Calefort Developments, Emsworth Assets and Trimcroft Service, all members of VS Energy group.
The dispute over the 40.19% stake in Poltava Mining was first initiated by former shareholders in 2005; ten years later, in 2015, the Supreme Economic Court upheld the rulings by the lesser courts and rejected the claims filed by the plaintiffs.
Ferrexpo owns 100% Yeristovo Mining and Poltava Mining and 99.9% of Belanovo Mining.
A Ukrainian court recently seized majority stakes held by Ferrexpo in these three Ukrainian subsidiaries as an interim measure related to a lawsuit filed by the state against Ferrexpo's biggest beneficiary, Konbstantin Zhevago. Soon after, Ferrexpo said Zhevago's stake in the company had been reduced to a non-controlling 49.5% from 50.3%.