Ukrnafta postpones tax restructuring vote

Ukraine’s leading crude oil producer Ukrnafta (UNAF UK) announced on June 23 it will have to postpone its AGM scheduled for July 7, at which shareholders were planning to approve the mid-term restructuring of its tax debt. The AGM’s agenda, which included proposals on tax debt restructuring that exceed UAH 10 bln, had to be approved by the Ukrnafta supervisory board on June 22. However, the board meeting failed to convene as all the representatives of minority shareholders (five board members out of 11) and one representative of the key shareholder, Naftogaz, were absent. Ukrnafta’s CEO expressed hopes in a press release that the supervisory board meeting will be held soon.

In his June 23 comments to the pravda.com.ua news site, Igor Kolomoisky (who controls over 40% of the shares in Ukrnafta with his partners) said that his representatives on the board (five members, as we understand) had no intention to participate in the board meeting. He said that some of the items that were planned to be discussed at the meeting could weaken the minority shareholders’ position in court. Most likely, he was referring to the complaint submitted to the international arbitration court against Ukraine for the compensation of USD 4.67 bln in losses incurred by Ukrnafta.

Alexander Paraschiy: Now it’s certain that Kolomoisky and Naftogaz failed to find a common solution on Ukrnafta’s tax restructuring plan. Most likely, they were not able to agree on how much money each of biggest Ukrnafta shareholders should bring back to the company.

Meanwhile, the supervisory board meeting won’t be able to convene without Kolomoisky’s representatives (quorum is eight members of 11), which means the restructuring plan can’t be approved if Kolomoiskiy doesn’t like it. So either Naftogaz supports all of Kolomoisky’s initiatives on the restructuring or it will fail. All this supports our view that the risk of Ukrnafta failing as a going concern is high.