JSC Ventspils nafta (VN) is a major shareholder of JSC Latvijas Kugnieciba (LK) holding 49.9% of LK core capital. Since 2008, the composition of VN shareholders has changed significantly. Earlier this year, new VN Board and Council Members were appointed that reflect those changes. The new VN Board does not trust LK Council Members elected in the beginning of 2008, or the majority of the management appointed by them. According to the limited information that is available, in the absence of audited accounts, it appears that the LK Council tolerates activities of the Board, and those that influence it, which most likely have and will continue to cause considerable losses to LK. For these reasons, VN wishes to exercise its legal right as a shareholder to recall current LK Council Members, so that all of the shareholders of the company can appoint a new, legitimate council and thereby achieve changes in the the management and activities of the company aimed at ensuring its survival.

It can be expected that the appoint Council Members will probably reveal legal violations and suspicious transactions beyond what is already known. Most probably this, together with the fact that they continue to pay themselves extraordinary inflated salaries, could be the reason that the LK Board and Council Members continue to strenuously resist holding a shareholders’ meeting by ignoring VN’s request to hold such a meeting within the time set in the law, postponing the meeting without any legal justification and setting an unreasonable date for the next meeting. Such activities of LK officials have actually excluded all shareholders from LK management.

As VN is unable to change the composition of the Council and thus stop squandering of LK assets, the only mean left to VN to protect its rights is litigation of transactions conducted by LK and its subsidiary companies and decisions of LK companies.

Therefore VN has submitted to Riga Regional Court Civil Matters Panel a request to invalidate the SIA Nafta Invest Shares Procurement Contract concluded between NILARDA HOLDINGS LIMITED and SAGEWOOD TRADING INC, and to invalidate the LK Board decisions on procurement of SIA Nafta Invest shares and conclusion of the SIA Nafta Invest Shares Procurement Contract.

According to the Commercial Register, on 21 May 2010 NILARDA HOLDINGS LIMITED, a company registered in Cyprus, sold to SAGEWOOD TRADING INC., a company registered in Liberia, all shares of SIA Nafta Invest. Purchaser of shares – SAGEWOOD TRADING INC. – is a subsidiary company of Latmar Holdings Corporation. Latmar Holdings Corporation, in turn, is entirely owned by LK. The procurement of SIA Nafta Invest shares directly negatively impacts on LK (by changing its underlying asset base and cash position) and accordingly influencing also VN interests.

VN has evidence to suggest that shares were most likely sold to Sagewood for USD 25 000 000. This transaction has caused considerable losses to SAGEWOOD TRADING INC. and thus also to LK and its shareholders.
 

Ventspils nafta

Zane Bojāre
JSC „Ventspils nafta” PR Manager
E-mail: zane.bojare@vnafta.lv
Phone.: 67821691; 29706733