Lenta's U.S. Co-Owner Seeks Redress

MTShoppers at a Lenta store. Meyer says he will not return to Russia until he has recovered his stake in the company.
August Meyer, the U.S. co-owner of St. Petersburg-based supermarket chain Lenta, is seeking to recover his stake in the company after his Russian business partner, Oleg Zherebtsov, replaced the CEO in an apparent attempt to gain control.

Meyer, who owns 36 percent of Lenta's British Virgin Islands-registered parent company to Zherebtsov's 35 percent, said in an interview that the company had been "stolen away" from him in a classic violation of corporate ethics.

A simmering conflict between the company's two main shareholders blew up early this month when Zherebtsov fired CEO Sergei Yushchenko, a Meyer loyalist, in a move apparently aimed at strengthening control over the chain before a planned initial public offering.

The boardroom struggle now looks likely to scupper that IPO, however.

"We now have someone in our St. Petersburg office who says he is the CEO and has actually been firing people," Meyer said by telephone late last week from the British Virgin Islands.

Meyer said he had filed a lawsuit in a British Virgin Islands court to recover his stake in the company and that he would not return to Russia until he received a court ruling declaring the seizure illegal. "I am not here on vacation," Meyer said.

The other shareholders in Lenta include the European Bank for Reconstruction and Development, which last year paid $125 million for an 11 percent stake.

Meyer reacted to Yushchenko's firing by calling a Jan. 15 shareholders meeting of Lenta Ltd, the parent company that owns a 100 percent stake in OOO Lenta. The meeting reinstated Yushchenko by a majority vote, according to a statement issued by four shareholders, including Meyer.

But a board meeting of OOO Lenta the next day called by Zherebtsov voted to fire Yushchenko again and appointed Vladimir Senkin as general director and member of the board.

Zherebtsov said the conflict was prompted by his decision last year to start a new retail chain of his own, called Norma. He said Meyer took his decision as "a personal insult."

"[Meyer] was not pleased by my decision ... to develop ... the Norma one-stop store format," Zherebtsov said in a statement.

Meyer then asked Zherebtsov to step down as the company's general director, and Zherebtsov moved to assume the position of board chairman instead.

Zherebtsov claimed that Meyer also asked him to quit as board chairman and sell his stake in the company. Meyer denied this, however, and insisted that his business partner had quit as general director of his own accord.

"He resigned his position before I even knew about Norma," Meyer said. "I never asked him to sell his shares. It's a complete lie."

Meyer insisted that Zherebtsov and Senkin were illegally taking over Lenta.

"We will see whether [Zherebtsov] will defy a court in the British Virgin Islands," Meyer said.

Meyer hinted, however, that an out-of-court settlement was still possible.

"There's always a chance if he and Senkin stop their assaults on the company," Meyer said. "We are always ready to discuss the problem, and the problem is the illegal assault on the company."

Lenta operates 26 hypermarkets across the country and owns several shopping centers, including in St. Petersburg, Novosibirsk, Nizhny Novgorod, Astrakhan and Barnaul.

The company reported revenues of $1.02 billion in 2006, compared with $653 million in 2005.