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. Last Updated: 07/27/2016

Tensions Flare Up Between Yukos, Shareholders




Relations between Yukos and the minority shareholders in its subsidiary companies sank to a new low Friday at an extraordinary general meeting of the Tomskneft oil company.


Minority shareholders in Tomskneft, a Yukos-controlled company, called the meeting to protest alleged abuses of their rights by Yukos management. The minority shareholders were led by U.S. investor Kenneth Dart, a longtime Yukos opponent.


But the meeting in central Moscow quickly collapsed after the two sides failed to agree on which shareholders should be represented.


Dart's side claimed that Yukos had lost control of its 51 percent stake in Tomskneft in a court decision in November over a debt. Yukos said it still controlled the stake.


When the two sides failed to agree and Yukos refused to allow Dart's representatives to air their grievances, the minority shareholders moved to a separate meeting room in a nearby building.


The two camps - Yukos and the minority shareholders - then held parallel meetings, both claiming to be legitimate.


The Yukos meeting voted down minority shareholders calls for changes to the company charter and ejected representatives of Dart's company Acirota from the board of directors.


The alternative meeting of minority shareholders elected its own board and voted numerous amendments to the charter.


Yukos acquired a controlling stake in December 1997 in Eastern Oil Company, which owns 51 percent of Tomskneft.


Minority shareholders however claimed that Eastern Oil had lost control of these shares following a court case in November initiated by a third party for repayment of a $22 million debt.


Yukos spokesman Andrei Krasnov countered that the debt was not binding because it was incurred by Eastern Oil only one day before Yukos took over. He also said the Russian Supreme Court had suspended the earlier decision about the shares.


Dart's company Acirota owns 13.9 percent in Tomskneft and another 35 percent is dispersed among a large group of shareholders.


The meeting first broke down when Leonid Filimonov, president of Tomskneft, refused to accept a request from Michael Hunter of Acirota to give the floor to the court bailiff who had seized Eastern Oil's shares.


The minority group had prepared a room for their own meeting, expecting a dispute over whether Yukos still controlled its stake in Tomskneft.


"We anticipated such a development though we could not know for sure this would happen," said John Papesh, a director of Acirota.


The meetings were further clouded by the mysterious late arrival of a plane from Tomsk in western Siberia which was carrying minority shareholders to the meeting. Some arrived late and one was refused registration by Filimonov.


There were about 80 people at Acirota's meeting and about 30 at the one held by Eastern Oil and Yukos.


Eastern Oil argued that Acirota was simply incapable of managing Tomskneft. "These foreigners do not even understand Russian taxation," said Filimonov.


Acirota countered that Eastern Oil was denying them access to crucial information. "They only allow us to have a look at balance sheets for a quarter of an hour and do not allow us to take copies. The methods they use are so primitive. We spend a lot of time preparing legal arguments but suddenly doors are locked and we're excluded," said Papesh.


The dispute between Yukos and its minority shareholders over Tomskneft seems to be headed for court. It will be just one of many battles between Yukos and Dart, both at Tomskneft and at other Yukos subsidiaries such as Samaraneftegaz and Yuganskneftegaz.


The Federal Securities Commission last year cancelled several decisions taken by Yukos which it said were in breach of minority shareholders rights.


Dart, owner of Michigan-based Dart Containers with annual sales volume of $500 million, is a feisty international investor who once took the Central Bank of Brazil to court.


The outcome of the tussle might ultimately depend less on court decisions than on the financial situation of Yukos which is desperately trying to service its $1.5 billion debt.


Hunter of Acirota said the case was a test of foreign investors' rights in Russia. "It is very unlikely that Russia will be able to raise in the West the capital it badly needs unless shareholders are sure that their rights are protected properly."