LMZ Chief Ousted Amid Share Feud
- By Andrey Musatov
- Jul. 26 2000 00:00
ST. PETERSBURG -- The conflict for control over the nation's leading manufacturer of turbines for electrical power stations, St. Petersburg's LMZ metal plant, has resulted in the ousting of the plant's general manager, Yevgeny Gulyayev. He was appointed by oligarch Vladimir Potanin's Interros Group, which is in a feud over the plant with the Energomash engineering holding.
The Federal Bankruptcy Service revoked Gulyayev's license to direct the company Friday, leaving one of the biggest industrial concerns in St. Petersburg without a legally entitled director.
Eight months ago, while LMZ was under external management, it decided to create an extra share emission. As a result, 51 percent of the company's stock ended up in the hands of Interros structures. The stake held by Energomash, the former majority shareholder, was reduced from 32 percent to 15 percent, according to Vedomosti.
"That emission was appealed by Energomash in the Moscow regional arbitration court," said Viktoria Vergelskaya, press secretary at LMZ's engineering branch. "In June, the court decided that the emission was legal." The bankruptcy service's regulatory commission subsequently suspended Gulyayev's license due to what a Kommersant newspaper report described as a violation of securities legislation.
"This is a very old conflict," said Lev Sovulkin, senior analyst at the Leontyev Center for Social and Economic Policy in St. Petersburg. "Both companies are ready to use all possible methods to gain control over LMZ. At the start of the conflict, Energomash fired the plant's board of directors. In November 1998, LMZ was hit with a suit over its debts by a minor creditor, probably as an attempt by one of the sides to use a bankruptcy situation to influence the outcome.
"Now the main action in the struggle is taking place in the sphere of stock trading," Sovulkin said. "I don't think that the conflict will be resolved any time soon."
The bankruptcy service's decision came into force Monday. However, at a Friday news conference, Gulyayev said he would keep his place at the plant.
Vergelskaya said Gulyayev will defend his position in an appeal as soon as he receives official notification of the revoking of his license.
The legitimacy of Gulyayev's position at LMZ is in doubt. The regulatory commission ruled that LMZ was an object of social importance f meaning that the government considers the company vital to the national economy. Such companies are subject to greater governmental regulation. Accordingly, the charges against Gulyayev for security violations led the bankruptcy service to claim the right to suspend his license.
But Gulyayev said the company's special status shouldn't have been an issue. "We offered to avoid the conflict by giving up this status," he said. "Especially since LMZ doesn't really fall within the guidelines.
"The bankruptcy service's actions were a blatant violation of the regulations," Vedomosti reported Gulyayev as saying. "And the attitude of the regulatory commission in this matter shows that the bankruptcy service is seriously prejudiced in favor of Energomash."
With the revoking of Gulyayev's license, the recent emission of LMZ stock will come under scrutiny as well.