The Polish state has established a “temporary custodian” for a 19.82% stake held by a Russian businessman in Polish fertilizers and chemicals company Grupa Azoty SA, according to a July 11 Polish Press Agency (PAP) report, citing Poland’s Minister of Economic Development and Technology Waldemar Buda.
The stake is held indirectly by Viatcheslav Kantor, who is a large shareholder in Russian fertilizer producer Acron Group through related parties including Norica Holding Sàrl of Luxembourg, Opansa Enterprises Ltd. of Cyprus, and Rainbee Holdings Ltd. of Cyprus, according to a statement on Grupa Azoty’s website.
Buda said the Polish state is seeking a partner to take over the shareholding and pay compensation. Reports circulated in May that the ministry might take over the stake (GM May 12, p. 33) to deprive Acron of executing its voting rights at Azoty’s shareholder meetings following Russia’s invasion of Ukraine, according to the newspaper Puls Biznesu, as cited by Bloomberg.
In its statement, Azoty said Kantor is not a beneficial owner of the Azoty group within the meaning of the European Parliament and the European Council, and that he “neither owns nor has control over the group within the meaning of the EU sanctions legislation.”
In a July 13 statement on its website, Acron said it believes that the temporary compulsory administration imposed by the Polish ministry on its three subsidiaries is “a gross violation of both international and national law.” Acron said its companies intend to challenge these illegal actions in Polish courts, the European Court of Justice, and through international arbitration.
The Russian fertilizer group added that it has held the shares in Grupa Azoty since 2012, and to date “has not been actively involved in the company management, remaining a portfolio investor and operating strictly within the legal framework.” It said it views the actions of the Polish authorities as “unmotivated, unjust, and illegal expropriation.”
Acron added that Radosław Kwaśnicki, who was appointed as the temporary administrator, is a member of the Supervisory Board of Orlen Group’s subsidiary and held a similar position in PKN Orlen S.A. in 2014-2019.
“Therefore, the appointed administrator has a potential conflict of interest because Orlen is also a fertilizer producer in direct competition with Grupa Azoty and Acron Group on certain markets, and has recently announced its intention to acquire Grupa Azoty Puławy, a subsidiary of Grupa Azoty,” Acron said.
In a move to improve its financial position, Grupa Azoty in June inked a cooperation and non-disclosure agreement with Polish energy group Orlen SA on the potential sale of Azoty’s most profitable subsidiary, Zakłady Azotowe Puławy, to Orlen (GM June 9, p. 1).
Azoty in the past two months has warned that it may breach debt covenants at the end of the second quarter after reporting a first-quarter group net loss of Pln555 million (approximately $138 million at current exchange rates). The company on July 13 said it sees its situation as “stable with jobs not at risk,” adding that it expects “optimization of production processes and improvement of the business situation” in the third quarter.