Cancellation of the IPO may give the minority shareholder a chance to return the sold shares of the plant

Minority shareholder of OJSC Chelyabinsk Pipe Rolling Plant (ChTPZ) Alexander Starostin decided to take advantage of the fact that the company refused to hold an IPO. Yesterday it became known that he filed a lawsuit in which he demands the return of the shares of the plant sold in 2010, after ChelPipe carried out an additional issue in preparation for the placement. Lawyers believe that the maximum a minority shareholder can expect is compensation for losses resulting from an incorrect assessment of the market value of shares.

As follows from the materials posted on the website of the Chelyabinsk Arbitration Court, Alexander Starostin, in a lawsuit against ChTPZ, demands that last year’s deal to buy out 16,048 thousand ordinary shares of the plant at a price of 42.7 rubles each be declared invalid, and also asks the court to allow him to purchase new ones shares of the plant from an additional issue for the canceled IPO. In addition, he asks to recover moral compensation from the plant in the amount of 30 thousand rubles for damage “expressed in moral and physical suffering.” The reasons why the minority shareholder decided to return the shares could not be clarified in court. The hearing of the claim is scheduled for June 21.

Let us remind you that ChelPipe has already planned to conduct an IPO twice. Last year, in preparation for the placement, the company decided to increase the authorized capital by placing additional shares by public subscription for 472.382 million rubles. The nominal value of each security of the additional issue was 1 ruble. Moreover, before November 3, 2010, ChelPipe bought shares worth more than 1.9 million rubles from shareholders who, at an extraordinary meeting on August 20, 2010, voted against increasing the authorized capital by placing an additional issue or did not participate in this meeting. In January and then in May 2011, ChTPZ abandoned its IPO plans, disagreeing with the market assessment.

The ChTPZ Group unites OJSC Chelyabinsk Pipe Rolling Plant, OJSC Pervouralsk New Pipe Plant, the metal trading division of CJSC Trading House Uraltrubostal, the company for the procurement and processing of scrap metal LLC META, and the oil service division represented by the company Rimera. The main owners of ChTPZ are Andrey Komarov - 73% (through Mountrise, in which he owns 95%) and Alexander Fedorov - 8.1% (owns 5% of Mountrise and 100% of Poweredge, which controls 4.3% of shares of ChTPZ), the rest - free froat. At the end of the first quarter of 2011, revenue amounted to 20.1 billion rubles, net profit - 2.4 billion rubles.

Yesterday, ChelPipe refused to comment on the minority shareholder's claim, citing the lack of a court decision, confirming only that the deal took place last year. “The current practice of considering corporate disputes involving shareholders by Russian courts is not in favor of minority shareholders. As a rule, holdings as large as ChTPZ do not commit gross violations during the share repurchase procedure,” says Prokhor Savitsky, partner at the law firm Vinder Law Office. According to Maxim Kolesnikov, Chairman of the Private Law Bar Association, the maximum that Mr. Starostin can count on is compensation for possible losses from the transaction: “For example, if the shares were valued at an unfair market price. And the plaintiff can prove that he was misled.” Oleg Petropavlovsky, an analyst at BrokerCreditService Investment Company, also suggested that the shareholder might not be satisfied with the fact that after the sale the shares increased in price. “Moreover, the value of the shares indicated in the claim corresponds to October 2009. Even if the offer was announced on average six months in advance, the value of the share at the time of the transaction should still have been no less than 59 rubles,” Mr. Petropavlovsky calculated. In general, in his opinion, shareholders who are dissatisfied with the additional issue are usually “glad that they are ready to buy back shares.”

Tatyana Drogaeva

ChelPipe is placed in arbitration