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. Last Updated: 07/27/2016

Minority Investors Demand Surgutneftegaz Negotiations

Angry minority investors who oppose the conditions of oil major Surgutneftegaz's consolidation plan have threatened to take Surgutneftegaz to court unless it negotiates with the investors.

Minority investors led by the former head of the Federal Security Commission, Dmitry Vasilyev, sent letters this week to Surgutneftegaz management and the firm advising Surgut to ask the companies to address investors' concerns, Alexander Branis, associate director of Property Capital Management and a member of the protesting group, said.

The letters sent to Surgutneftegaz and Morgan Stanley Dean Witter investment company were signed by Vasilyev, who now chairs the Coordinating Center for the Defense of Investors' Rights and Legal Interests.

"In our opinion, it is time to begin constructive dialogue with shareholders in order to secure their rights and legal interests, since, if such dialogue is denied, the Center will be forced to support shareholders defending their rights in court," the letter to Surgutneftegaz CEO Vladimir Bogdanov read.

Ever since Surgutneftegaz, the nation's third-largest oil company by output, announced its consolidation plans in January, the vague scheme has excited controversy.

Complaining about lack of information on the deal, some foreign investors said they feared their stakes would be diluted and management would gain 75 percent control of the company - leaving investors out of the decision-making process.

Surgutneftegaz, however, managed to win approval of investors holding more than 75 percent of its shares for emission of 12 billion new common shares in AO Surgutneftegaz, which it plans to swap for shares in management firm Surgutneftegaz NK. If completed, restructuring will leave shares only of the daughter company, AO Surgutneftegaz, on the market.