Ferrexpo forced to hold second vote on director re-appointments

Ferrexpo, which manufactures iron ore pellets which are used in the steel industry, has received a high level of opposition from shareholders to a number of resolutions at its AGM this week (19th May) including those relating to the appointment of non-executive directors. This has meant the company will need to call a second vote to seek approval for their reappointment.

The company has a majority shareholder Fevamotinico Sarl  which has a 50.3% stake. If  a resolution to re-elect an independent director is not passed by both a majority of the independent shareholders and a majority of all shareholders, the company said it may put the matter to a second vote of all shareholders to be held between 90 and 120 days after the AGM. The voting results show that there were 75% against the appointment of Mary Reilly, Oliver Baring, Wolfram Kuoni, Ihor  Mitiukov and Bert Nacken amongst the company’s independent shareholders and 29% of all shareholders.

The company stated that, “The board currently intends, once it has consulted shareholders, to hold a second vote for the re-appointment of Mary Reilly and Bert Nacken, who were appointed to the board in May 2015 and August 2014 respectively, and to vote for the re-appointment of Oliver Baring, Wolfram Kuoni and Ihor Mitiukov if successors have not yet been found for them by that time.”

There were also significant votes against (29%) both the approval of the annual reports and accounts and the approval of the remuneration report as well as the re-election of the two executives on the board – the chief executive,  Kostyantin Zhevago and the finance director, Christopher Mawe – as well as in the vote for the re-election of the chairman Michael Abrahams. Abrahams is due to stand down in a few months after completing a handover with Stephen Lucas who did receive a full endorsement by shareholders as did Sir Malcolm Field who had been appointed as an independent non-executive director in March.

As highlighted in Manifest’s meeting business report, Zhevago is a beneficiary of the Minco Trust which owns 100% of the major shareholder, Fevamotinico Sarl. Consequently he, the Minco Trust and Fevamotinico Sarl have entered into a relationship agreement with the company to ensure that the group is capable of carrying on its business independently, that transactions and relationships between the group, Fevamotinico Sarl, the Minco Trust and Zhevago are at arm’s length and on normal commercial terms, and that there shall be at all times a majority of directors independent of Fevamotinico Sarl, the Minco Trust and Zhevago on the board.

Commenting on the voting results the company said that, “the board of Ferrexpo notes that there were a significant proportion of votes cast against a number of resolutions at the AGM.  The board will continue to engage with shareholders to better understand the reasons behind the vote result, and the chairman welcomes the opportunity to discuss the outcome of the votes with any shareholder who wishes to do so.”

In September 2015, Ferrexpo, which is head-quartered in Switzerland saw Bank F&C, a related party ultimately controlled Zhevago, declared insolvent. Bank F&C held about US$174m of Ferrexpo’s total cash balance of about US$280mln after payment of the interim dividend.

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