URALCHEM seeks criminal proceedings in connection with the illegalasset withdrawal from Togliattiazot
URALCHEM OJSC has submitted documents to the Investigative Committee of theRussian Federation in the Samara region to initiate criminal proceedings under Part 4of Art. 159 of the Criminal Code against the management and shareholders of Togliattiazot.
Moscow, Russia (January 18, 2013)
--URALCHEM OJSChas submitted documents tothe Investigative Committee of the Russian Federation in the Samara region to initiatecriminal proceedings under Part 4 of Art. 159 of the Criminal Code (fraud committed by anorganized group or on a large scale) against the management and shareholders of Togliattiazot.URALCHEM has knowledge that, in 2010, the management of Togliattiazot sold theoperating methanol production facilities, which have a capacity of 450,000 tons-per-year, tothe company Tomet. The sale was conducted without notice to the shareholders and at aprice substantially below the fair market value of the property. In particular, the sale of equipment totalled 130.39 million roubles (around $4.32 mln USD) and the land on whichthe production facilities are located was sold for 2.06 million roubles (around $600,000USD). At the same time, a similar unit was launched in Russia by another enterprise, whichwas priced at 13.54 billion roubles (around $450 mln USD).Therefore, Togliattiazot effectively gave away property worth more than 13.543 billionroubles (around $450 mln USD) to Tomet. This property comprised more than 48% of thebook value of Togliattiazot's assets. Moreover, the sale of the methanol production unitsignificantly reduced the sources of income for Togliattiazot and resulted in a sharp fall in itsprofits.Registration documents confirm that Tomet, through a chain of non-resident companieslocated in offshore jurisdictions, is affiliated with Togliattiazot's majority shareholders andmanagement, namely members of the Makhlais family and their partners, the Zivys family.URALCHEM has been a shareholder in Togliattiazot since 2008, owning 9.74% of thecompany's shares. During this period, numerous violations of corporate law and companylaw have been committed against Togliattiazot's minority shareholders. The violations havebeen confirmed by various decisions of Russia's Federal Financial Markets Service andcourts.