TOGLIATTIAZOT HAS BEATEN ROSIMUSHCHESTVO

TogliattiAzot (ToAz) can celebrate a small victory. The Highest Arbitration Court has taken the side of the Togliatti chemical company in the controversial dispute related to the legality of the exchange of the 51% Transammiak shares for 6.1% of TogliattiAzot shares.he suit, which was initiated by Rosimushchestvo, has been approved for a new hearing in the Arbitration Appellate Court. Nevertheless, experts highlight that the the Highest Arbitration Court decision does not mean that ToAz shall win the new trial.

OAO TogliattiAzot is the sixth largest world producer of fertilizers and the first global producer of ammonia (supplying 8% of the world market). In 2006, ToAz’s produced 2635000 tons of ammonia, 407000 tons of methanol and 783000 tons of urea. According to informal sources, ToAz managers control some 90% of the shares. The parties related to Renova Orgsintez, which is controlled by Viktor Vekselberg, hold about 9% of shares.

In 1996, ToAz received 51% of Transammiak shares (an operator of the Russian Federation part of ammonia pipeline Togliatti – Odessa) in exchange for 6.1% of ToAz shares. However, after almost ten years, Rosimushchestvo has cast doubts on the legality of this exchange. In July2006 the Samara Region Arbitration Court declared that the exchange was void and obligated the company to return Transammiak shares to the government. Later in January 2007, this decision was adopted by the Povolzhsky Territory Arbitration Court as an appellate judgement.

Yesterday the Highest Arbitration Court of the Russian Federation awarded in favour of ToAz in connection with their request to appeal the decision of the Samara Region Court regarding the exchange of the 51% of Transammiak shares by permitting the case for a new trial in the appellate court. ToAz’ officials said to RBC Daily that they were satisfied with the Supreme Arbitration Court decision but refused to comment on the court’s procrastination in delivering a verdict. Rosimushchestvo refused to comment yesterday.

Valery Yeremenko, ToAz’ attorney, told RBC Daily that sending the case to the court of first instance is justifiable due to the occurrence of numerous infringements during the course of the initial investigation. He added that “During the initial hearing of the case in the Povolzhsky Territory Court, the judges had been constantly replaced however each time the judges were replaced the trial was not conducted from the very beginning as it should be according to the law”. In his opinion, the exchange of the shares was at fair value but Rosimushchestvo officials dispute this and seek to have the defendant return the Transammiak shares, in return, they offer to remunerate only the nominal value of the 6% of ToAz shares.

Anton Kostenko, a senior lawyer of Yegorov, Puginsky, Afanasjev and Partners firm of attorneys, believes that an adjourment can be interpreted as a great victory for the company. Mr. Kostenko is convinced that the case will be examined in a year and a half or even two years and during this period, the shareholders will hold the company’s shares. He emphasises that if the case had been passed to the appellate court under procedural grounds then the court decision would not be significantly changed. In the opinion of Alexander Vaneev, a lawyer of Magister & Partners law firm, in such circumstances the Highest Arbitration Court decision may be interpreted as a kind of an implicit instruction to the appellate court, which will be used to review the case.