Russian LetterOne owners cede operational control
Russian shareholders Mikhail Fridman and Petr Aven have been locked out of their LetterOne investment group, which owns a minority share in German gas company Wintershall Dea, the Financial Times reported March 2.
Fridman and Aven own a minority position in Wintershall Dea through LetterOne, an investment partnership they co-founded in 2013 after disposing of their TNK-BP stake to Rosneft for $14bn. The pair were placed under EU sanctions on March 1 for their alleged support of Vladimir Putin, meaning their shareholdings in the company have been frozen.
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LetterOne is unaffected operationally as Fridman and Aven together own slightly short of a 50% share in the company, and sanctions only apply if businesses where blacklisted individuals have a majority share. However, conscious of the blow to LetterOne's reputation, the board has decided to act on its own accord.
LetterOne's portfolio comprises diversified assets across markets including the EU, UK and US. Ownership of the company has now passed to chairman Lord Mervyn Davies, a former UK government minister, the FT said. Davies will look to enlist an additional three non-executive directors for the board, working with other group investors.
Fridman and Aven, whose fortunes totalled $17.4bn as of March 3, according to Forbes, will no longer have shareholder rights or receive dividends at Wintershall Dea. And, given EU sanctions on the two Russian shareholders, their stakes cannot be sold onto new owners, Davies told the FT. The Wintershall board is not required to restore their rights once sanctions are lifted.
Yet Fridman and Aven both strenuously deny the allegations of support for Putin's administration and have begun building a legal case to overturn the sanctions. Fridman accepted, nevertheless, that their exit from LetterOne was the "right thing to do for the company."