British American Tobacco Faces Suit of 9 Billion Rubles
Minority holder of BAT-Yava tobacco factory, Branston Holding (BH), has lodged a suit against factory’s principal holder, British American Tobacco (BAT). The official purpose of BH is to make BAT pay back 9.351 billion rubles to the factory, which it allegedly concealed when selling cigarettes to International Tobacco Marketing Services. But the true reason could be winning higher price for the factory’s stocks.
Stavropol Region’s Court has accepted for trial a new suit of BH, said Sergey Kovalev, the managing partner at Strategy & Trinfico, that stands for BH in Russia’s courts.
The deals of BAT-Yava and International Tobacco Marketing Services were made at the underestimated prices and led to the short-received profits of 9.351 billion rubles generated from 2003 to 2005, Kovalev specified.
Apart from International Tobacco Marketing Service, BAT and Hamultun (big minority holder in BAT-Yava), the defendants are 11 members of the BOD, including BAT-Russia Managing Director John Tailor. The first trial of the suit is slated for November 23.
Since past August, holders of over 95 percent in the joint stock companies may force minority holders to sell their stocks at price set by an independent appraiser. To benefit from this provision of Russia’s laws, BAT bought out a portion of BAT-Yava stocks from Hamultun and extended the ownership to 97.78 percent.
BH doesn’t mind selling actually, but it wants to do it at a profit. BAT offers the price of 16.13 rubles/stock, having calculated it under the Ernst & Young’s appraisal of the factory. “Should the factory get 9.351 billion rubles, its revenues would go up along with the cost of the stocks,” Kovalev made clear the true grounds of the suit.
www.kommersant.com
All the Article in Russian as of Nov. 03, 2006
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