Tight-lipped responses from candidates fuel further speculation over ownership structure (685 words)

Published: 9/11/2001

Aeroflot held its EGM on Thursday 6th September 2001, with 13 candidates joining the board of directors. The state put up eight candidates: · Alexander Braverman, First Deputy Property Minister (10.85% of present votes) - elected · Evgeny Shaposhnikov, Advisor to President on Aviation (11.01% or 9.18%) - elected · German Gref, Economics Development and Trade Minister -elected · Sergey Frank, Minister of Transport - elected · Sergey Molozhavy, Deputy Property Minister -withdrew · Vladimir Chernuhin, Deputy Finance Minister (10.91% or 9.09%) - elected · Vladimir Goryachev, Head of the Economic Regulations Department with the Transport Minister -withdrew · Yury Zaostrovtsev, Deputy Director of Russian Federal Security Service (not an existing board member) -elected Aeroflot proposed Valery Okulov, its General Director - elected Outside shareholders (Carroll Trading SA and Nimegan Trading, reportedly backed by Russian Aluminium and Sibneft) proposed the following candidates: · Alexander Zurabov, Deputy General Director for Economics and Finance-elected · Alexander Komrakov, Director of Corporate Relations, Russian Aluminum Management -elected · Mikhail Vinchel, General Director of Prospect Investment Company-elected · Alexander Nemtsov, Executive Director of Profit House-elected Sergey Molozhavy, Deputy Property Minister and Vladimir Goryachev stepped down before the election in a move that was designed to prevent a government nominee not being elected, as they had insufficient votes. The makeup of the new board has not produced any surprising developments, given that the lineup was the result of some extensive trading prior to the announcement of the EGM The new board members, Mikhail Vinchel, General Director of Prospect Investment Company, and a nervous Alexander Nemtsov, Executive Director of Profit House, refused to comment about their elections or for that matter on Aeroflot, adding support to the view that they are front men for Russian Aluminium, believed to control Carroll Trading SA and Nimegan Trading, which hold the Aeroflot stock. They did not, however, directly support the Russian Aluminium candidate, Alexander Komrakov suggesting that the new shareholders may wish, in public at least , to distance themselves from the aluminium giant. Even so, the new shareholders proposed and supported Alexander Zurabov, although he, too, refused to comment on his election and those who had supported him. Exactly what the holding of the major shareholder is beside the state is difficult to calculate, but comments from Sergey Molozhavy, before stepping down, indicated that the next major shareholder had 27% of the company from votes registered before the EGM. 92% of the shareholders participated, although the ownership of the remaining 8% is unclear. Reports have suggested that the major outside shareholder's holding may have grown to 35% since the closing of the registration for the EGM. Okulov, who carried the highest vote, is believed to have garnered most of his support from the company's employees and minor shareholders as the state made it clear that it was only supporting its own candidates. It is premature to predict with any accuracy what the major shareholders may be have in mind for the Russian flag carrier, as the new shareholders have revealed little. According to Okulov, they have not yet made any comments or suggestions on a future strategy for the company, adding, with some irony, that he doubted that this was because Aeroflot was perfect. Rumours continue to circulate that the very public support of Zubarov, by the outside shareholders, make him a likely replacement for Okulov as General Director when his contract comes up for renewal next year. In the interim, they may attempt to plant people in senior positions within the airline, in order to begin influencing policy. Alternatively, they might wait and continue to acquire minority holdings in advance of a possible sale to a strategic investor and ahead of the still scheduled, but delayed privatisation of the government's holding. The former option seems to be a more probable route and certainly one that Russian Aluminium has employed elsewhere when it has taken large stakes, although not as covertly as in this case.

Article ID: 2749