Business Irish

Sunday 21 January 2018

Ex-Russian soldier with links to Putin locked in battle with Petroneft

Investor wants four directors removed from board, says Gavin McLoughlin

PetroNeft is active in the Tomsk region of Siberia Photo: Getty
PetroNeft is active in the Tomsk region of Siberia Photo: Getty

Battle has resumed between a Russian investor linked to Vladimir Putin and the management of Dublin-based oil and gas explorer Petroneft.

Natlata Partners, which owns more than 20pc of Petroneft, wants an extraordinary general meeting called at which it will seek to remove four of the Irish-based company's directors: chief executive Dennis Francis, company secretary David Sanders, chief financial officer Paul Dowling, and non-executive chairman David Golder.

The move is a re-ignition of a similar row in 2014 when Petroneft unsuccessfully sought to have the same individuals, plus one other director who has since left the board, removed.

In a statement issued earlier this week Natlata criticised Petroneft's use of funds received as part of a farm out deal concluded in July 2014.

"In the 21 months since we last proposed reform at Petroneft we have been a loyal and supportive shareholder. However, we have watched with dismay as the company burned through all the $45m it received from the Farm Out to Oil India, while its share of production virtually halved and its share price went down by 60pc.

"Last summer we proposed that Petroneft appoint two independent directors nominated by us, but they have failed to address this matter in a reasonable time and are continuing to postpone the decision.

"The current management has no-one else to blame for the continued poor performance of the company and we believe that other shareholders will share our view that no more 'second' chances should be given. It is now time for change."

In response to Natlata's statement Petroneft told the stock exchange that it is taking appropriate advice and further announcements will be made in due course.

Natlata's beneficial owner is Maxim Korobov, a former member of the Russian parliament for Putin's United Russia party.

Korobov is a former soldier who was wounded in the Soviet-Afghan War. He wants to be voted on to the board along with financial executive Anthony Sacca and oil and gas expert David Stuart.

Sacca and Stuart would be independent directors, Natlata said.

"Natlata hopes that existing directors Thomas Hickey and Gerard Fagan will remain on the board to help the new members to restore and grow shareholder value. The new board will therefore have four independent directors and one Natlata nominee," the investor added.

Natlata describes itself as a private investment firm that seeks out investments with a focus on Russia and Commonwealth of Independent States - a grouping of former Soviet republics - countries that "appear to be distressed or are at an early stage of development and which will benefit from effective management and proven sector experience."

In a 2014 letter to shareholders Korobov described himself as "a businessman with over 20 years of Russian oil and gas experience".

"I have strong connections with the area where Petroneft operates," he said.

Korobov began buying shares in Dublin and AIM-listed Petroneft, which itself is focused on Russia, in 2007. The share price - now at 2.35p - has halved in London since May.

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