Russia’s Petropavlovsk (LSE:POG) once again finds itself in the middle of a coup that involves ousting its current board as the scion of one of Europe’s great banking families, a Kazakh tycoon who owns hedge fund D.E. Shaw, and mystery shareholders fight for control over the London-listed miner.
The potential coup comes on the heels of sinking gold prices and management missteps, which has 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 as well as 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.
According to Bloomberg, Petropavlovsk cut gold output in recent years to focus on more profitable ounces, which seems to be working so far. Last year, the company reported the 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.
There are currently multiple individuals looking to control Petropavlovsk. On the one side are two mystery shareholders who are trying to overthrow the current board and bring back old directors. On the other side are owners, including D.E. Shaw, that were responsible for throwing out the executives last year.
The pair of unidentified shareholders, CABS Platform Ltd. and Slevin Ltd., are registered in Gibraltar and Anguilla, respectively and own a 9.1 percent stake.
Rounding out the individuals involved in the battle is Kazakh tycoon Kenes Rakishev, who is the biggest shareholder, purchasing his stake in Petropavlovsk in December.
While Rakishev’s intentions are not currently clear, he has been vocal about his dissatisfaction in management since claiming his stake.
This 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 Ltd. and Sothic Capital Management LLP.
Since that coalition crumbled, Vekselberg sold his stake to Rakishev, while M&G 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.
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