(September 10, 2009 - London) Four Czech minority shareholders of ArcelorMittal’s subsidiary in the Czech Republic, ArcelorMittal Ostrava a.s. (AMO), staged a protest today in front of Berkeley Square House, the UK headquarters of ArcelorMittal SA. The protest was to highlight the shareholders’ grievances over the continuous actions taken by AMO and its parent company ArcelorMittal which are viewed as irregular and in violation to commonly accepted corporate governance standards. The individual Czech investors symbolically buried their minority shareholder rights at a funeral in front of the international steel giant’s office. A hearse and 3 pallbearers brought a closed coffin to the entrance of the building, while investors shouted into megaphones their discontentment with the non-transparent decisions and discriminatory actions taken by the AMO Board.
The dispute surrounds the fact that AMO has used the capital to provide two low-interest loans in the amount of CZK 25.4 billion (Euro 1 billion) to its parent company, ArcelorMittal SA, and other companies within the Mittal Group rather than re-invest the profits into the Ostrava company or pay out dividends to the Czech subsidiary. According to minority shareholders, the loans have created a loss of CZK 750 million (Euro 30 million) due to the exchange rate losses. Further, the recent August 20 ArcelorMittal Ostrava EGM passed a resolution to reserve almost a quarter of the company’s shares as collateral for a five-year period. The minority shareholders will not be privy to possible transaction details before hand, and will learn about it only from the annual report. It is important to note that since Mittal’s entrance into the Czech company in 2003, there has been never been a dividend payout.
This is not the first public protest staged by the minority shareholders. On 20 August, 2009, the minority shareholders participated in a protest in front of the Ostrava hotel where an Extraordinary General Meeting took place. They strewed feathers and rubber chickens in front of the hotel entrance symbolizing the plucking of their shareholder rights. While AMO executives fled through a side-door, the protest evidently fell on deaf ears, as further resolutions which only continue to harm the interests and share value of the minority shareholders were passed. This is why the Czech businessmen feel they needed to come to London in hopes of having their voices heard. “This extraction of capital is clearly a form of hidden distribution of profits. The minority shareholders bear all of the risks of this transaction and are offered no compensation while only the parent company benefits from the move. All we want is transparent decision making, re-investment into the company or a rate of return that reflects the company’s financial results,” said Jiri Psota, one of the four Czech minority shareholders protesting in London today.
“It’s obvious that the money already sent to ArcelorMittal in a form of low-interest intra-group loans will never be returned,” comments Petr Uvíra, another minority shareholder. “Our share value declines with the ability or willingness of the debtor to meet its obligations which is why I consider the actions of ArcelorMittal as fabricated and completely unacceptable,” adds Mr. Psota.
Not only are the minority shareholders concerned about the future of the company, but they are frustrated with the zero communication policy taken by the ArcelorMittal Ostrava Board. “We are neither seen nor heard. During general meetings and other forums, we have raised questions, concerns and reservations, only to be ignored,” said Petr Cervenka, another individual shareholder in London today.
In the Czech Republic, minority shareholders have already filed two criminal complaints in connection with the ArcelorMittal intra-group loans and their unfavourable conditions. Both complaints are under investigation with the financial criminality and anti-corruption units of the Czech Police. “We’re going to move forward with any and all possible legal means until ArcelorMittal addresses our complaints and change their behaviour,” stated Jaroslav Beranek. Both the Czech Prime Minister Jan Fischer and Vice President of the European Commission Günter Verheugen have received letters in relation to this situation and should no reversal in actions be noted, the minority shareholders will file a complaint against ArcelorMittal with the European Commission in Brussels.
“ArcelorMittal’s actions of the last several years represent a complete violation of internationally accepted corporate governance, and certainly are not the norm in the Czech Republic. I thought that the so-called tunnel techniques seen in the post-communist economies in the 1990’s, once viewed with criticism were a thing of the past but evidently they continue to thrive, at least in ArcelorMittal,” concludes Petr Uvira, who joined the other investors in London.
For more information, please visit http://min-amo.blogspot.com/
Photos of the event are available here. For more information in English, please contact:
Pavlina Rieselová
Smíchov Gate, Plzeňská 3217/16
150 00 Praha 5
tel.:+420 224 800 521, 224 828 065-8
Mobile: +420 603 154 583
e-mail: rieselova@ewingpr.cz
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