Hostilities among the board of Russian retailer Lenta continued at an extraordinary shareholders meeting on Friday, as investor groups continue to dispute who should be CEO of the company.
Lenta is majority owned by two opposing shareholders, Svoboda, which holds 40% and Luna, which holds 30% and is owned by private-equity firm TPG and state-owned bank VTB.
A source at the shareholders meeting on Friday told just-food that minority shareholders were left disappointed when they found out that, under the terms of an agreement between the two majority shareholders, a selection committee would consist of one Luna representative and one Svoboda representative. Svoboda has the right to veto any nomination, a source present at the meeting said.
Additionally, incumbent CEO Sergei Yuschenko announced that he has appointed chairman of the board Dimitry Kostygin as deputy-CEO. The source confirmed that Yuschenko said he considered his role in the company as temporary and therefore needed a deputy to manage Lenta as he is the general director of another retailer in Moscow.
The tension among the company’s two primary shareholders stemmed from a meeting on 27 May when August Meyer, who owns Svoboda, called for the removal of the company’s CEO Jan Dunning. just-food understands that Luna-owner TPG walked out of the meeting because it felt the call for Dunning’s dismissal was put onto the meeting’s agenda too late. It also felt there was no reason for Dunning to be replaced.
Svoboda believes it has legally replaced Dunning with Yuschenko, a position that TPG through Luna opposes.
Describing the shareholder meeting, Richard Wallis, a spokesperson for 11% stake holder, the European Bank for Reconstruction and Development (EBRD), said: “Everybody was very disappointed that aside from Yuschenko, no representatives from Svoboda turned up for the extraordinary shareholders meeting.”
Wallis said that those present were urging the appointment of a new director general as quickly as possible to protect Lenta’s market share. He added that one of the minority shareholders said: “If we go on like this we will make the lawyers very rich but the company will go down the toilet.”
The EBRD has now proposed itself as a mediator.
“All shareholders there shared the view that the current dispute can’t be resolved through litigation or arbitration and what is needed to restore trust so the parties can sit down together and discuss and move forward to agree at least on a process for selecting a new director general [CEO],” he said
However, a smooth process will be hampered by the criminal case that has since begun. According to Lenta sources, Dunning was illegally registered as CEO with the State Tax Inspectorate Registry on 17 August and Yuschenko has filed a complaint with the local economic crimes unit.
The source maintains that the changes that were submitted to the State Tax Inspectorate’s Registry could have only been made using forged documents. “To make the change you need a resolution from the board of directors and a company stamp, we are aware that one of the stamps are missing, but the board has not met for months,” they said.
Meanwhile, a case filed by TPG with the BBVI – the Russian crimes unit – arguing that Dunning’s dismissal was invalid has been dismissed.
TPG was unavailable to comment.