Russia’s Petropavlovsk finds itself in the middle of a coup for the second time this year due to a battle between shareholders aiming to take control of the company.
Russia’s Petropavlovsk (LSE:POG) once again finds itself in the middle of a coup aimed at ousting its current board.
The scion of one of Europe’s great banking families, a Kazakh tycoon who owns hedge fund D.E. Shaw and mystery shareholders are all fighting for control over the London-listed miner.
The potential upset comes on the heels of a sinking gold price and management missteps, which have reduced the once US$3-billion company to a penny stock. The company, which was started by Pavel Maslovskiy and Peter Hambro, is still of interest to investors as it still owns profitable mines and a new plant that will soon start operating.
“It’s a turnaround story,” said Ivan Mazalov, director at Prosperity Capital Management, a Russia-focused asset manager that recently bought shares in Petropavlovsk.
According to Bloomberg, Petropavlovsk has cut gold output in recent years to focus on more profitable ounces, a plan that seems to be working so far. Last year, the company reported its highest net income since 2012, with hopes that a new processing method could allow mining of more complicated ores.
Holding Petropavlovsk back from fully achieving a financial comeback is a fight for control of the company that began earlier this month.
As mentioned, there are now multiple individuals looking to control Petropavlovsk. On one side are two mystery shareholders who are trying to overthrow the current board and bring back old directors. On the other side are the current owners, including D.E. Shaw, who were responsible for throwing out executives last year.
The pair of unidentified shareholders, CABS Platform and Slevin, are registered in Gibraltar and Anguilla, respectively, and own a 9.1-percent stake in Petropavlovsk.
Rounding out the list of individuals involved in the battle is Kazakh tycoon Kenes Rakishev, who is the biggest shareholder. He purchased his stake in Petropavlovsk in December.
While Rakishev’s intentions are not clear at the moment, he has been vocal about his dissatisfaction in management since claiming his stake.
That means that the key issue will continue to be whether Petropavlovsk’s co-founders will be allowed to return or not. Both Rakishev and the new shareholders have called for Maslovskiy to retake the CEO job, but whether Hambro will join him or not is still up in the air.
Hambro was ousted last year by shareholders who were upset over company missteps, causing Maslovskiy to resign shortly after. The group was led by Russian billionaire Viktor Vekselberg and supported by D.E. Shaw, M&G Investment Management and Sothic Capital Management.
Since that coalition crumbled, Vekselberg has sold his stake to Rakishev, while M&G has sold at least some of its holdings to Prosperity Capital.
“We will listen to everyone’s story,” Prosperity’s Mazalov said. “The idea is to balance everyone’s influence. In a company where there are many shareholders, there should be a consensus.”
As of 2:33 p.m. EST on Monday (May 14), shares of Petropavlovsk were trading at GBX 6.95.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.