27th Jan 2014 13:42
LONDON (Alliance News) - Urals Energy PLC shareholders rejected all resolutions to remove the current board at Monday's extraordinary general meeting.
The exploration and production company with operations in Russia said all six of the resolutions were voted against by 67.02% of the company's shareholders.
"We are pleased that the majority of shareholders have decided to back the Board by resoundingly rejecting all of the resolutions proposed by the requisitioners at this EGM," Chief Executive Alexei Maximov said in a statement.
In September, Urals Energy's two biggest shareholders, Fire East Corp and Alpcot Capital Management Ltd, launched the attempt to remove all boardmembers because they said the company is underperforming.
Alpcot Capital Management since has sold all of its shareholding in the company and Torbjorn Ranta, the representative of Alpcot on the company's board, subsequently resigned.
Since the extraordinary general meeting was announced, the process has descended into infighting, amid allegations of intimidation and potential arbitration proceedings.
On Friday, Fire East, which has an 18.9% stake in Urals, said that on January 22 it received confirmation from UEN Cyprus Ltd that it has commenced arbitration proceedings against Urals and criminal proceedings against Maximov, the chief executive.
The UENC decision relates to a debt repayment agreement into which it alleges Urals entered in December 2010 and which would make Urals Energy liable to pay USD41.7 million.
Urals Energy argued earlier this month that it has no reason to believe the debt repayment agreement was genuine, and therefore did not believe that the company is bound by the terms. The firm said it had no record of the transaction and that due to inconsistencies in the document, the board concluded that the alleged agreement is a forgery and an attempt by a third party to defraud Urals Energy.
Urals Energy said that the alleged agreement was passed to the company's chairman via a Moscow-based investment banker who said he was acting on behalf of Maxim Barskiy, a board member of Fire East, and Dmitry Bosov, a major Russian businessman whom Urals Energy argues is connected to the takeover group.
Fire East said that there was a clear threat of bankruptcy hanging over Urals Energy with regard to the debt repayment allegations and urged shareholders to vote for its takeover of the company.
However, Fire East said that directors it had proposed to join the board following its possible takeover, now are not prepared to expose themselves to the liability they may incur by being linked to a company nearing bankruptcy, and so Fire East wrote to Urals Energy to withdraw from the EGM the resolution regarding adding new directors.
On Friday, Urals said that if the proposed resolutions to oust the board members were approved at the EGM, it would be "left without any directors on the board" as Fire East has not yet proposed any alternate directors and had withdrawn its request that Maxim Barskiy and Jonathan Kolleck be appointed to the board.
Urals warned that if it were left with no board it would "be forced to seek the immediate suspension of its shares as it would be unable to operate effective as a quoted company, pending the appointment of a suitably experience board."
Urals said earlier this month that Fire East does not have a viable strategy for Ural Energy's development, and it will undermine efforts of recent years by the company to clear out struggling legacy assets.
Urals Energy said Fire East had plans to acquire what it called a high-risk asset on Sakhalin Island in the Russian Far East. The plan had both geological and financial risks for Urals Energy, the company claimed, adding there is a real danger that shareholders will have their interests in Urals Energy significantly diluted if the resolutions are passed.
Urals also said that a visit by the police in December, which led to the removal of certain files from its offices in Moscow, may have been an attempt to intimidate the board into acting against the best interests of shareholders, citing possible connections between the police visit and both a loan due from a former director of Urals Energy, Vyacheslav Rovneiko, and the alleged debt repayment agreement made by the company.
UEN Cyprus is owned by Rovneiko, who was ordered in 2012 to pay the company USD3.7 million by arbitration proceedings in London to recover a separate loan agreement.
Urals Energy said it is yet to receive the cash it is owed by Rovneiko, but it has managed to auction off personal belongings of Rovnieko's, found in his registered home in Belgium. Also, in both Russia and Cyprus there are court orders for the seizure of all of Rovnieko's assets.
Despite the allegations by Fire East and UEN Cyprus, Urals shareholders strongly rejected the board removal attempt Thursday.
"With this matter now concluded, we hope the company can move ahead with the full support of all its shareholders and the Board looks forward to updating the market on our operations in due course," Maximov said.
Urals shares were up 1.4% to 7.10 pence Monday.
By Tom McIvor; [email protected]; @TomMcIvor1
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