business and government

As the Rosbalt agency reported yesterday, the prosecutor's office of the Komi Republic, on behalf of the Prosecutor General's Office of the Russian Federation, began checking the legality of the actions of officials who decided on an additional issue of shares of JSC Bauxit Timan. According to the Prosecutor General's Office, after the placement of shares, the republic may lose a blocking stake in this company. The SUAL-Holding company, the owner of a controlling stake, believes that the issue is being carried out legally.
JSC "Bauxit Timan" (BT) owns the Srednetiman bauxite deposit (raw materials for the aluminum industry), containing about a third of the country's bauxite reserves. The company produced about 900 thousand tons of bauxite in 2002. 74% of the shares of Bauxite Timan belong to the Siberian-Ural Aluminum Company (SUAL), 25% plus 1 share belongs to the Ministry of Property Relations of the Komi Republic.
The ratio of share capital between the largest shareholders - SUAL and the Komi Republic - has not changed since 1997, although during this time BT carried out five additional issues. The sixth additional issue in the amount of 24.9% of the authorized capital was registered in December 2002. In January, SUAL announced its intention to buy out the entire additional issue and increase its stake in this enterprise to 80%, and the First Deputy Head of the Komi Republic, Alexey Grishin, told reporters that local authorities would not exercise the preemptive right to buy out the securities entitled to them. Moreover, Mr. Grishin stated that the republic’s existing stake will be put up for sale.
Two weeks after this statement, Mr. Grishin was dismissed, and the head of the Komi Republic, Vladimir Torlopov, hastened to announce that “the fate of the state stake in Bauxit Timan has not been finally determined.” In an interview with a local television company, he explained the decision to support the additional issue by saying that “SUAL is a conscientious investor,” and after increasing the capitalization of Bauxite Timan, the price of the shares remaining with the state “will increase several times.”
However, according to a report from Rosbalt, the Prosecutor General's Office of the Russian Federation was concerned by the fact that the regional budget of the republic for 2003 did not provide funds for the repurchase of shares of BT's additional issue. In this regard, local prosecutors were tasked with assessing the legality of the actions of officials representing Komi’s interests in BT and voting to increase the company’s authorized capital. The prosecutor's office of the Komi Republic declined to comment yesterday, citing the fact that the check would last until March 20.
According to Kommersant's information, 89 million rubles had to be allocated to the republican budget for 2003 to maintain a blocking stake. The government did not have this money, and initially the representative of the republic in BT, Minister of Property Relations Vasily Kuznetsov, voted against the additional issue. But then the officials’ opinion changed: Deputy Head of the Republic Evgeniy Leskin supported the additional issue (he was subsequently dismissed).
As Vasily Verbin, deputy director of the SUAL-Holding corporate relations department, told the Rosbalt agency yesterday, “the issue is carried out in accordance with the law, and we do not know what caused the prosecutor’s office to be interested in it.” In turn, a member of the board of SUAL-Holding, Alexey Goncharov, in a conversation with a Kommersant correspondent, said that the deadline for submitting applications for the redemption of shares is March 15, and before that day “it is simply impossible to talk about violations of the rights of any of the shareholders.”
Kommersant will monitor the development of the situation.
SERGEY Kommersant-SOROKIN, ANASTASIA Kommersant-KRESTININA Syktyvkar; EKATERINA Kommersant-Safarova

Newspaper "Kommersant" No. 41 dated March 12, 2003, p. 16

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The prosecutor's office is developing "Bauxite Timan"