Ukrnafta to pay UAH 23.3 in DPS, gets new CEO

The shareholders of Ukrainian oil giant Ukrnafta (UNAF UK) were able to hold a meeting on July 22 to approve dividends and change its leadership. In particular, shareholders voted in favor of the distribution of 99.9% of its 2014 bottom line (UAH 1.26 bln) in dividends. This implies UAH 23.32 in DPS and 8% in dividend yield. The record date for dividends was set for Aug. 3, and they should be paid by Oct. 3.

Shareholders also voted to dismiss the company’s CEO Peter Vanhecke and replaced him with another foreigner, Mark Rollins, a top manager of British BG Group (BG/ LN). Shareholders also replaced one of the 11 members of the company’s supervisory board (consisting of six state representatives and five allies to Igor Kolomoisky). The company’s former CEO and former Odesa regional administration head, Ihor Palytsia, joined the board under Kolomoisky’s quota. The Ukrainian government has a 50 percent-plus-one share stake in Ukrnafta, with the remainder (at least 42%) controlled by Kolomoisky.

Alexander Paraschiy: With the vote, Kolomoisky has ceded his control of the company’s top manager, and thus control over Ukrnafta’s operations. But the situation might be temporary, we believe. Vanhecke was elected as Ukrnafta CEO in 2011 as an independent figure, equally distant from both the state and Kolomoisky. But he ended his career in the company aligned with Kolomoisky.

Although Rollins was nominated to the CEO position by the Ukrainian government (meaning he should be loyal to its interests), Kolomoisky also publicly supported his nomination and voted for his candidacy at the AGM. It seems like Kolomoisky’s plan is to gradually draw Rollins to his side and, as usual, regain full operating control over Ukrnafta. Meanwhile, Ihor Palytsia’s entrance to the company’s supervisory board (he was company CEO for almost eight years, before Vanhecke) should serve to compensate Kolomoisky’s possibly weakened position in the company. All in all, we do not expect significant changes in Ukrnafta’s strategy and operations in the mid-term.