Small shareholders can derail Kremikovtzi rescue plan
Tuesday, 13 Oct 2009
A check of Dnevnik showed that the plan to revitalize Bulgaria's ailing steel behemoth Kremikovtzi could be contested in court by minority shareholders and any other stakeholder over violation of rights guaranteed by the Public Offering of Securities Act.
The legislation does not permit the proposed capital increase at the public company as it deprives minority shareholders of their rights to participate in the procedure in accordance with their holdings and on an even playing field.
This was confirmed for Dnevnik by Mr Nikolay Bebov of law firm Tsvetkova Bebov & Partners and two other legal experts with extensive experience in the capital market. But experts on company bankruptcies suggested that POSA, which protects the rights of minority shareholders, could be overridden by the Commercial Code regarding insolvency.
In the summer of 2009, Kremikovtzi’s court-appointed receiver, Tsvetan Bankov, came up with a proposal to convert into shares the creditors’ claims worth around BGL 944 million. If the plan is put into practice, the company’s capital will be augmented from the current BGL 18.5 million into BGL 963 million, with bondholders controlling more than 81%. The project companies with POSA could not pass by the Commercial Code.
Sources close to bondholders told Dnevnik that legal action against the rescue plan by minority shareholders was discussed in the spring. Another scenario discussed by stakeholders has been making bondholders majority owners of the plant so that they can make a buyout bid for the leftover capital.
