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. Last Updated: 07/27/2016

UES Investors Win Chance to Vote Out Chubais

Anatoly Chubais, head of national power utility Unified Energy Systems, is battling once again to keep controversial restructuring plans and his own directorship from toppling.

On Thursday, Chubais said minority shareholders had secured the required 10 percent of votes to hold an extraordinary general meeting in September, news agencies reported. The meeting is expected to consider ousting the electricity provider chief and changing the company's charter to make it harder to approve restructuring plans and easier to fire managers.

Earlier in the day, a UES board of directors meeting seemed to back Chubais, who was due to meet with a group of foreign minority shareholders spearheading opposition to the UES head, because of his plans to restructure the vast holding.

In what was seen as a bid to stem the flow against him, Chubais said he supported the holding of the extraordinary general meeting and a vote on his own ousting, which he said "would solve many problems for UES," in televised statements Thursday.

"It must be made clear whether Chubais has support or doesn't, and it should be stated clearly," Chubais said Wednesday in statements reported by Interfax. Chubais also vowed to push ahead with his plans.

"It's senseless to stop me," he said.

Analysts said the latest standoff may be a final battle f which most said Chubais looks set to win. If left standing, the former privatization chief would have a mandate to continue his restructuring plans.

"The conflict has become so bitter and ugly that the [extraordinary general meeting] has to settle the issue," said Marina Oganesyan, energy analyst at Aton brokerage. "But I'm not sure foreign investors want Chubais out," she added. "The question of firing is kept open as a lever of influence."

While foreign investors have approved many of Chubais' efforts, especially those substantially raising the cash component of company revenues, they oppose Chubais' plan to split the behemoth's generation units from its distribution business and effectively sell off regional electricity providers.

Foreign shareholders were also due to meet presidential chief o f staff Alexander Voloshin on Thursday. Voloshin was re-elected to the post of chairman during the board meeting Thursday, while Finance Minister Alexei Kudrin was elected deputy chair.

Chubais also said Thursday that the government supported his restructuring plans, which were reflected in the government's economic program. The plans include restructuring the country's so-called natural monopolies, which include UES.

The government f which holds 52.8 percent of UES shares f has so far kept its position on the shareholder conflict under wraps, but Deputy Energy Minister Valentin Kudryavy on Tuesday criticized the voting process during a shareholders' meeting earlier this month, in which Chubais was re-elected to his post.

Kudryavy f a UES board member f sent a letter to the Federal Securities Commission accusing the meeting's vote-counting commission of illegally leaking information to influence the outcome of the vote.

Kudryavy pointed to the fact that a number of candidates elected to the board of directors received the same percentage of votes f the minimum amount needed, Russian media reported.

Analysts said the attack was one in a series and did not represent a significant threat to Chubais.

A NIKoil daily market report called the accusations "not only erroneous but simply obtuse."

"He was at the meeting," the report continued, "and only observed that the outcome of the vote was suspicious almost a month after."

Meanwhile, Vedomosti newspaper reported Thursday that minority shareholders began preparations to call for the extraordinary general meeting three weeks ago, when a letter was sent out to all major shareholders asking them to vote in favor of holding the meeting.

Foreign shareholders control around 33 percent of UES. That number is key because, under UES's company charter, the firm's director can only be replaced if shareholders representing 75 percent of the company's equity vote in favor of the move.

Minority shareholders have said they want to lower that requirement to 66 percent, Vedomosti reported.

Foreign investors also want to require that shareholders representing three-quarters of shares vote in favor of plans to restructure the company or sell its assets before either can go ahead. Currently, only management can approve such plans.

Former Finance Minister Boris Fyodorov, a UES board member and supporter of minority shareholders, said Kudryavy's accusations warrant investigation and further complained of the way in which holders of UES American Depositary Receipts vote. Fyodorov has questioned a decision in May by the Bank of New York f which represents about 50 percent of ADR holders f according to which it transferred its voting rights to UES management.

A Renaissance Capital market report said the move was tied to Fyodorov's opposition to restructuring plans. NIKoil said Fyodorov's move f like Kudryavy's f was timed to coincide with Chubais' meeting with foreign investors.