Naftogaz Initiates Reshuffle of Ukrnafta's Management?

At their AGM on April 16 shareholders of Ukrnafta (UNAF: SELL) plan to recall and elect the management board, and to replace the company’s registrar, it announced on Friday. The agenda of the shareholder meeting also includes considering distribution of 2006-2007 earnings, recall and election of the supervisory board and audit commission, an issue on selling currently stored gas to Naftogaz of Ukraine, and some other issues. Vladimir Nesterenko: The agenda looks very much like the one set for January’s meeting that failed due to a lack of quorum, and unambiguously points to the meeting being initiated by Naftogaz. Apparently, the first-best outcome for the government would be getting a majority in the management of Ukrnafta (currently the board is controlled by Privat). At the least, the state wants the company to pay 2-year dividends and to sell gas at a capped price (USD 52.6/bcm). We believe the only way for the state to get a majority in Ukrnafta’s management is to lobby a parliamentary vote to reduce the minimum quorum requirement from the current 60% of votes to 50%, which we think is hardly possible as it would not match the interests of Ukraine’s business elite. We do not see even minor evidence that Privat and the government have agreed on key stumbling blocks, so we expect Privat to ignore Naftogaz’s ‘invitation’. Without Privat, controller of 42% of Ukrnafta, there will not be quorum, meaning once again no meeting.