Petropavlovsk founder calls for rival to be forced to make an offer
London-listed Russian gold miner urges action from UK regulators in wake of UGC stakebuilding
The co-founder of Petropavlovsk has called for its biggest shareholder to be “ordered” to make an offer for the company to end a shareholder stand-off that has plunged the Russia-focused gold producer into boardroom turmoil.
Pavel Maslovskiy said he felt sure billionaire businessman Konstantin Strukov had purchased a 22 per cent stake because he wanted Petropavlovsk to merge with UGC, the rival Russian gold miner Mr Strukov controls.
“He’s officially stated it is financial investment . . . but my guess is, and it is not a difficult guess, is that he sees the possibility of a merger,” Mr Maslovskiy told the Financial Times.
He added that if Mr Strukov “is in such love with the company he needs to be persuaded or ordered by regulators to make an offer”.
Petropavlovsk was rocked last month when Mr Maslovskiy, then chief executive, and six other directors were ousted in a boardroom coup the London-listed company claims was orchestrated by UGC, one of Russia’s top five gold miners, working with three other shareholders.
The company and its second-biggest shareholder Prosperity Capital Management have asked UK takeover regulators to investigate whether UGC and the Russian investors — who controlled 39 per cent at the time of voting — were acting as a concert party and should be forced to make an offer or sell down their stake.
UGC, which is seeking to increase its shareholding to more than 26 per cent by converting a bond, has denied acting in concert with other shareholders and trying to take control of the company by stealth.
It says it bought the stake in February because Petropavlovsk was undervalued and it saw the potential for further share price gains.
Aided by a higher gold price, Petropavlovsk, which owns a state of the art processing plant in Russia, was one of the best-performing stocks in London over the past year, climbing 260 per cent.
Its shares rose a further 16 per cent to 36p on Thursday, giving the company a valuation of £1bn.
Mr Maslovskiy acknowledged that he had discussed a merger with Mr Strukov but only in very “general” terms.
“Optically it [a merger] looks interesting because the new entity would be in a different league, producing about 1m ounces,” said Mr Maslovskiy. “[But] we don’t have any information on [UGC’s] reserves, resources nor financial information.”
Mr Maslovskiy said Mr Strukov “understood” more than a year ago that he needed to provide that information for discussions to progress and “give me a chance to understand what possible value” could be created by a merger. “[At our] last meeting June 16 [2020] he said it was still a job in process,” said Mr Maslovskiy.
Mr Maslovskiy, who agreed to take the job of interim chief operating officer while the company seeks to reconstitute its board, said he would like his old position back while he oversees a shift to a new generation of executives.
“It should be done in a smooth way and preferably the successor should have a good knowledge of the company and come from inside,” he said.
Mr Maslovskiy was speaking after Petropavlovsk issued a trading update and said it was on course to produce 620,000 to 720,000 ounces of gold this year
“It appears the underlying assets are delivering for Petropavlovsk, showing that the engines driving value are firing, despite recent board-level uncertainty,” said Sam Catalano, analyst at Canaccord Genuity.