Supreme Court Cancels Dniproenergo’s Additional Share Issue

Today the Supreme Court of Ukraine ruled in favor of Biznes-Invest’s appeal against a decision by the High Economic Court that recognized the additional share issue of Dniproenergo (DNEN: HOLD) on August 27, 2007. The Supreme Court upheld a decision by the Appellate Economic Court of Zaporizhya Region that invalidated Dniproenergo’s August 27 AGM results. No other details of the court decision are currently available. Alexander Paraschiy: Though DTEK’s ability to push through the results of the AGM looked substantial, the Supreme Court ultimately decided against the private energy holding. While the Supreme Court’s ruling seems to have closed the legal conflict, we believe this is not the end of the story. One key question remains uncertain: whether Dniproenergo’s financial recovery will be rolled back. As part of its financial recovery plan (which included the AGM), DTEK-related coal mines contributed USD 200 mln in cash to Dniproenergo; this money has been already spent to offset Dniproenergo’s debt. In any case, the news is positive for minority shareholders (their stakes are not diluted under the ruling), though it will have a negative impact on Dniproenergo in the short-term: first, it means an escalation of the corporate conflict between the company’s current management and its main shareholder, the NC ECU; and second, it means the company will have to re-enter its financial recovery process.