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. Last Updated: 07/27/2016

Court Faults NOSTA Share Issue

The Moscow State Arbitration Court has ruled that registration of the last flotation of shares by NOSTA, a steelworks in the Orenburg region, should be canceled.

However, the owners of the shares say they will appeal the decision and the cancellation will not take effect until court proceedings are exhausted.

That will leave the enterprise saddled with two general directors, neither of whom is prepared to cede control of the steelworks to the other.

NOSTA, the Orsko-Khalilovsky Metallurgical Combine in Novotroitsk - a town 1,200 kilometers southeast of Moscow - is valued at about $1 billion and annual sales of about $600 million, the Skate information agency said.

The public conflict at the enterprise started July 12 when shareholders elected a new general director, Yury Grinin, to replace Pavel Gurkalov.

Gurkalov, who refused to recognize decisions made at the meeting, filed suits in the Orenburg appeal arbitration court and the Moscow arbitration court against the Federal Securities Commission, calling on the commission to cancel registration of the last share issue. The issue had been registered last November and purchased by NOSTA Metallhandels GmbH - a former affiliate of NOSTA headed by Grinin.

Gurkalov has said in interviews that the issue was supposed to be passed over to Gazprom and the Orenburg administration, and was only temporarily placed with Grinin's company, which paid $6 million for the purchase. Grinin said his company's purchase was final.

The share issue represented about 50 percent of NOSTA's total equity.

Acquiring them gave Grinin control of a 63 percent stake in NOSTA. Having obtained the majority, Grinin got himself elected general director.

Prime-Tass reported that the Moscow court's decision was based on a ruling made Monday by the Orenburg appeal court. The Orenburg court said a part of the agenda for a NOSTA shareholder meeting was invalid.

This part of the meeting discussed an amendment to NOSTA's charter to let shares be issued. As the issue was based on the invalid paragraph, its registration was ruled to be invalid by the Moscow court, Prime-Tass reported.