Chubais calls not to pay

Minority shareholders of RAO UES want to receive dividends 23 times higher than last year's

Anatoly Chubais refused to speak for the first time at yesterday’s annual conference “RAO UES of Russia - an open company.” Moreover, at this event, contrary to tradition, neither the chairman of the board of directors of the energy holding, Alexander Voloshin, nor the majority of board members, nor the heads of subsidiaries were present at this event. And Mr. Chubais at the press conference, as usual lately, tried to praise his team for the reform carried out, fantasized about the future of the electric power industry (at the request of investment company analysts) and in every possible way emphasized that the problem of supplying power plants with gas is still not resolved.

However, the loudest statement by the head of RAO was made in connection with the preliminary results of the extraordinary meeting of shareholders held on December 6 . “We will refuse to pay dividends in general (for 2006 - Ed. ),” he said. “We will make such a proposal to the majority shareholder.” Investors reacted to yesterday's news from RAO by increasing quotations (apparently still in the hope of high dividends). At the end of the trading session on the MICEX, ordinary shares of the energy holding rose in price by 1.55%, to 26.28 rubles, and preferred shares by 3.3%, to 23.48 rubles. On the RTS, ordinary shares rose by 2.65% to $1.005, exceeding the $1 per share level for the first time. Anatoly Chubais attributed the market reaction to the power sector reform.

The situation with the payment of dividends worsened in the summer of this year, when, in connection with the spin-off of wholesale and territorial generating companies according to Russian accounting standards, as Mr. Chubais says, RAO generated a huge “paper” profit. And according to the charter, the amount of funds allocated for dividends on preferred shares cannot be less than 10% of net profit. Therefore, the issue of changing the charter was submitted to an extraordinary meeting of shareholders. The decision is made if the holders of ordinary and preferred shares vote for it in an amount of at least 75% plus one share. Apparently, this volume cannot be achieved at the shareholders' meeting - many minority shareholders of RAO ignored the vote. “We understand that it would be fairer not to pay dividends only on preferred shares, but by law the decision on all types of shares must be the same,” Anatoly Chubais said yesterday. -- If we were to pay dividends on preferred shares based on this “paper” profit, which was formed according to the rules of RAS, then the volume of payments on preferred shares should be increased by 23 times. This is definitely unfair, wrong, unreasonable. This cannot be done - not by common sense, not by anything. But it turned out that when we asked the owners of preferred shares to refuse this (increase in dividends - Ed. ), they thought and said: “Why should we refuse? It will grow and grow. It’s okay, we’ll survive with this money.” Well, we probably didn’t do enough ourselves somewhere; we could have worked more technologically.”

As a result, according to preliminary data that Mr. Chubais announced (and, as he expects, to receive a fine from the Federal Financial Markets Service for this), it was not possible to change the charter. So management proposes to completely abandon the payment of dividends and direct the funds intended for these purposes to investments. “This is not a very pleasant decision for us,” he said. -- There may be a misunderstanding among shareholders that the company is in dire financial straits. No, that's not true. According to the results of the quarterly report published recently according to international financial reporting standards, profit increased by 23%, this is normal.”

Shareholders of RAO are not yet in a hurry to express their opinion about Mr. Chubais’ initiative. Rosimushchestvo (which owns 52% of all types of RAO shares) could not be reached for comment yesterday. The Siberian Coal Energy Company and Interros refrained from assessing Mr. Chubais's statement. A source at Gazprom told Vremya Novostey that there is no official proposal from the management of the energy holding, and therefore it is too early to say anything. And the director of the Prosperity Capital Management fund (a portfolio shareholder of RAO) Alexander Branis told Vremya Novostei that now “dividends are not the main thing , the pace of division of RAO and liberalization of the industry is much more important.” Preferred shares, in his opinion, should be converted into ordinary shares, then there will be no disputes.

However, a Vremya Novostei source close to the board of directors of RAO claims that the problem of dividends will be discussed at today's board meeting. It is there that an agreed resolution will be developed in general terms, which will be proposed to shareholders at the annual meeting in June next year. After all, the decision to pay or not pay dividends is made by a simple majority of votes.

Nikolay GORELOV