The Moscow Arbitration Court rejected Tuesday a 3.35 billion ruble lawsuit filed by US-based investment fund Russia Partners against Russia’s Eurocement Group. The court rejected the lawsuit as it was drawn up in such a way that contradicted Russian law. Russia Partners is seeking compensation for alleged profit stripping by Eurocement Group.
The investment fund filed the lawsuit through two of its subsidiaries, Kolden Holdings Ltd and Serpell Holdings Ltd, which hold a 44.4 per cent combined stake in Russian cement producer Eurocement.
Eurocement Group, which holds the remaining 55.5 per cent in Eurocement, changed the corporate structure of Eurocement without informing the other shareholders in order to redistribute a large part of Eurocement’s profit to itself, Russia Partners claimed.
In 2004 Eurocement’s net profit fell 68 per cent on the year to 409.341 million rubles, while Eurocement Group posted a net profit of 4.186 billion rubles, compared with a loss of 342.228 million rubles in 2003, Russia Partners said. (26.9187 rubles - US$1)
Eurocement controls 13 cement plants in Russia and two plants in Ukraine. Eurocement’s annual production capacity totals 33Mt. Russia Partners is an affiliate of US private equity firm Siguler Guff & Company.