URALCHEM’s official statement regarding unreliable information disseminated in the media

URALCHEM’s official statement regarding unreliable information disseminated in the media

Recently, a number of media and social media have disseminated unreliable information discrediting the business reputation of URALCHEM, JSC.

These publications of the same nature falsely accuse URALCHEM of attempting a corporate raid on TogliattiAzot, PJSC. The materials denigrating the company's reputation state that, ‘because of the actions of URALCHEM’s lawyers, [the owners of ToAZ] became participants in the fraud case’. This information is false. For several years, URALCHEM, JSC has been seeking that the management of PJSC TogliattiAzot observes the rights of minority shareholders and stops violating the laws in the course of TogliattiAzot’s economic activity. In relation to TogliattiAzot, PJSC, URALCHEM has always acted within the legal framework. In 2012, at the request of URALCHEM, law enforcement agencies initiated a criminal case under Art. 159, Part 4 of the Russian Criminal Code: fraudulent large-scale misappropriation committed by a criminal association. At the end of 2017, the criminal case investigation was completed and the Prosecutor General’s Office confirmed the indictment against the company’s managers Vladimir Makhlay, his son Sergey Makhlay (a US citizen), the former General Director of TogliattiAzot Corporation, CJSC Yevgeny Korolev and the owners of Nitrochem Distribution AG, Swiss citizens Andreas Tsivi and Beat Ruprecht-Wedemeyer. Currently, the criminal case is being considered in the Komsomolsk District Court of Tolyatti.

In connection with the investigation, it is hoped that the stolen money totalling 89 billion roubles will be returned to the victims and TogliattiAzot.

During the investigation, law enforcement agencies revealed a complex international offshore scheme, which caused TogliattiAzot, PJSC and its shareholders multibillion rouble damage. The Russian Investigative Committee, despite the active opposition of the accused, was able to collect a sufficient amount of evidence to confirm their guilt and the extent of damage.

Simultaneously with the fraud case investigation, in relation to TogliattiAzot’s owners, a number of arbitration cases related to the underpayment of taxes in 2009-2011 totalling approximately 1.6 billion roubles were considered. The Supreme Court upheld the validity of additional tax payments enforced on the company. In addition, the Federal Tax Service established that TogliattiAzot filed false tax reporting and underpaid a large amount of taxes in 2012-2015. Tax arrears for this period amounted to around 1 billion roubles. Now the company’s management is trying to challenge these additional charges in the Arbitration Court of the Samara region.

For many years, TogliattiAzot has been using a management system that infringes upon the rights of minority shareholders and jeopardizes production safety and the logistics activities of the company. A large part of TogliattiAzot’s fixed assets is idle, and the entire production facility is very inefficient. The majority shareholders of PJSC TogliattiAzot reside abroad, and, according to URALCHEM, cannot exercise complete control and adequately assess the actions of the company's management.

URALCHEM, JSC is interested in the most efficient operation of the plant and intends to protect its rights as a minority shareholder of TogliattiAzot, PJSC.

In addition, biased publications disseminated in order to undermine the business reputation of URALCHEM, JSC stipulate ‘a nowhere near best technical condition of URALCHEM’s units’ or even ‘shutdown of one of the enterprises upon request of Rostekhnadzor’.

Such information is not true. For the entire period of operation (since 2007), none of URALCHEM’s units has been shut down by supervisory authorities. URALCHEM officially declares that the activities of all holding companies have been regular, in compliance with all industrial safety, occupational health and environmental protection standards. All shutdowns of existing facilities were scheduled and exclusively for the purpose of their upgrade.

The media disseminates information about the allegedly poor financial condition of URALCHEM, and that ‘the raid on TogliattiAzot is [for URALCHEM] a way to pay off its debts, since no external borrowing sources have left’.

In this regard, URALCHEM declares that such statements are the figments of their authors’ imagination. URALCHEM holding has been operating steadily for many years after the 2009 crisis, showing a positive financial performance. The company maintains a constructive relationship with creditor banks, meets all loan commitments on time and in full. In 2017, the company's net profit reached 16.2 billion roubles, while EBITDA exceeded 25.5 billion roubles. URALCHEM also honours its obligations to the state and society. In 2017, over 3.6 billion roubles in taxes were paid to the Russian budget; more than 550 million roubles were allocated for charity projects.

The above publications provide false information about the foreign interests and projects of URALCHEM and its executives. In particular, they say that URALCHEM is allegedly interested in gaining control over the Odessa Port Plant (the end point of the Tolyatti – Odessa ammonia line) in order to achieve complete control over TogliattiAzot. In this regard, URALCHEM declares that OPP has never been in the sphere of the company’s economic interest and such allegations are unreliable.

In addition, the publications contain false information about allegedly existing economic and political goals of Dmitry Mazepin, Board Chairman of URALCHEM, JSC, in Ukraine. In this connection, the media mention the names of Igor Kolomoisky, Dmitry Firtash and Mikhail Saakashvili. In fact, neither URALCHEM, nor its executive Dmitry Mazepin have entered or intend to enter into any relations with these persons, nor have they any political or economic goals in Ukraine.

According to other false statements, Dmitry Mazepin ‘went to Latvia’ and began to ‘finance a number of parties, primarily of a Nazi type,’ who ‘doubled their representation in the Latvian parliament through cooperation with Mazepin’. URALCHEM declares that such disseminated information is deceitful and slanderous, aimed at discrediting its honour, dignity and business reputation.

URALCHEM, JSC assumes that the above publications are related to the attempts of defendants in the criminal case to exert pressure on the court, to avoid responsibility and to discredit URALCHEM as a victim and claimant.

In order to protect its business reputation, URALCHEM, JSC reserves the right to take measures provided for by Russian legislation.