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Dniproenergo’s AGM: Was it or was it not?

Dniproenergo’s AGM: Was it or was it not?

21 March 2008

According to the management of Dniproenergo (DNEN: HOLD) and representatives of State Securities and Exchange Commission, the AGM of Dniproenergo, scheduled for today, did not take place. A decision by the Economic Court of Zaporizhya region, where the company’s central office is located, banned Dniproenergo from convening an AGM today, and representatives of the main shareholder, the National Energy Company of Ukraine (NC ECU), did not check ahead of the meeting. In addition, the company’s registrar did not provide a list of shareholders, according to Dmytro Tevelev, a member of Dniproenergo’s board of directors. However, Ihor Maliy, representative of the National Energy Company, told a different story: the AGM did take place, not in Dniproenergo’s office, but nearby outside, as the registrar was not permitted to enter. Maliy represented the NC ECU with its 76.04% stake, and voted to change the company’s CEO, supervisory board, audit commission and registrar. Mykhailo Mykhailov, representative of the NC ECU, was elected CEO. Alexander Paraschiy: Holding an “alternative AGM” at an unannounced address can be treated as violation of the rights of the company’s shareholders. We believe that validity of results of this AGM will be called into question by a court, given the ruling banning it from being convened today. Therefore, we think thecurrent management of Dniproenergo will remain in their positions. While in the short term, this uncertainty could lead to further volatility in the stock, we stick to our 12M target and do not change our recommendation on the stock.

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