Zhevago loses Supreme Court appeal on UAH 1.5 bln commitment

Kostyantyn Zhevago, the majority owner and former CEO
of Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPO LN), lost his
Supreme Court appeal on his commitment to repay UAH 1.539 bln (USD 57 mln)
being claimed by the National Bank of Ukraine (NBU), according to
epravda.com.ua, a news site, which cited a court decision made on Apr. 14 and
published on Apr. 21.

Zhevago’s personal commitment was made in relation to
a refinancing loan that the NBU extended in 2015 to Zhevago’s former bank,
Finance & Credit (F&C).

Zhevago’s second-tier appeal was left unheard in
November because he failed to pay UAH 34.6 mln (USD 1.28 mln) in court fees,
and instead paid only UAH 533, according to the Supreme Court decision. Zhevago
argued, unsuccessfully, in his Supreme Court appeal that the large amount of
the required fee was a barrier to access to justice.

Recall, in December the NBU reported having obtained an enforcement order
to recover the UAH 1.539 bln from Zhevago. The NBU said it planned to enforce
the amount against Zhevago’s personal funds, as well as against the assets of
some of the companies owned by Zhevago.

In January, Ferrexpo reported that an investigating
judge of the Pechersk District Court in Kyiv placed a restriction on a 50.3% stake in the shares of Ferrexpo
Poltava Mining (FPM). Zhevago owns 50.3% in Ferrexpo, and
Ferrexpo owns 100% in FPM. In March, Ferrexpo said that its appeal of this
decision will be heard by a court in April.

In December, the Prosecutor General’s website reported
that an investigating judge authorized Zhevago’s arrest
in relation to the embezzlement of UAH 2.5 bln (USD 92 mln) from F&C Bank.

Dmytro Khoroshun: We cannot
rule out that some Ferrexpo assets, including a stake in FPM, might be subject
to the NBU’s enforced recovery of Zhevago’s commitment related to the F&C
bank refinancing loan.

We expect that Ferrexpo’s management and board will
keep the public informed about the significant developments in Zhevago’s legal
problems that are potentially negative for Ferrexpo’s shareholders.