16/05/17

Raiding party's golden shot (The Times)

Alistair Osborne
Silverware just doesn't do it for some people. Take Bruce Buck, chairman of league champions Chelski. He's already moved on to goldware, turning up as part of a back-door raiding party on Russian goldminer Petropavlovsk.

And this time he's not even teamed up with his favourite oligarch, Roman Abramovich, but another one, Viktor Vekselberg. Remember him? Once of the famous TNK-BP oligarch quartet, the one that also starred German Khan, a man who liked to come "to dinner armed with a chrome-plated pistol". Or so said WikiLeaks.

Anyway, Mr Vekselberg's Renova Asset Holding outfit has linked up with two other investors: Sothic Capital and, curiously, the M&G Debt Opportunities Fund. Their aim? To oust Petropavlosk executive chairman Peter Hambro, 72, who cofounded the group in 1994, and its three independent non-execs. They want to replace them with Mr Buck, Vladislav Egorov, Ian Ashby and Garrett Soden (report, page 47.) It's the sort of game Mr Buck enjoys, given the rebel investors are presently 38-12 up. Mr Vekselberg controls 23 per cent of the shares, with Sothic and M&G together holding 15.7 per cent. Against them, Mr Hambro and his co-founding chief executive Pavel Maslovskiy each have around 5 per cent, while associates hold 2 per cent more.

The rebels say that the four directors in their sights have shown a "lack of requisite focus on corporate governance". And you could even say they've already scored a hit: Mr Hambro is giving up his chairman's role to become an executive director. But it's also obvious the whole set-to has little to do with corporate governance. Only two and a half years ago Petropavlosk almost went bust, bailed out by a $235million rescue rights issue at 5p a share. It proved the cue for an unlikely recovery. Last night, the shares closed at 7½p, down 0.7 per cent. The miner's back in profit, too. And as long as the gold price doesn't collapse, things could be looking up: two new projects should give access to higher-grade ores.

In short, it's not a bad time to try to gain control of Petropavlovsk on the cheap, without making an offer to all shareholders. True, technically, Renova and Sothic/M&G have made separate requisitions, each proposing two candidates. But big questions can be asked about them, not least over corporate governance.

Mr Egorov isn't independent: he works for Renova. Its other nominee Mr Buck advised on the 1.4billion IPO of miner New World Resources in his role as a Skadden, Arps lawyer. New World's since gone bust. Mr Ashby, one of the Sothic/M&G candidates, was a New World director. The other, Mr Soden, is a director of Gulf Keystone Petroleum, another terrible investor experience. M&G invested in New World, Sothic at Gulf Keystone.

M&G insists the candidates are independent, that it spent 2016 on a fruitless attempt to improve Petropavlovsk's governance and that it's not participating in a Russian-led management coup. But that's what it looks like. Retail investors hold a quarter of the shares, so for once their votes will count at June 20's AGM. Don't forget to use them.

Back to the list