Selena Oil & Gas Holding AB (publ) (the “Company”) describes important events
during the year 2013: i) Impairment of asset values of 232.7 million as a
result of changes in the Company's investment in OOO Selena-Perm ii) Position
after settlement with former shareholders and iii) planning of short-term
financing for of the Company.
Background information
This announcement is published by Selena Oil & Gas Holding AB (Publ) and
precedes the Company’s Year End Report and 12 month report due to be published
on February 28th 2014.
Selena Oil & Gas Holding AB has during 2012 and 2013 experienced a series of
complex events that have impeded the Company’s progress. These events caused
tension among shareholders and uncertainty with regard to the Company’s share.
This announcement provides information on such key events during 2013 as well
as comments and clarifications by the Company and its Board of Directors,
followed by an update on the Board’s position on financing and executing the
Company’s business plan.
Review of selected significant events in 2013
The Group’s holding in the Russian subsidiary OOO Selena-Perm
On 21 December 2012, Selena Oil & Gas Holding AB made public that it has
obtained information on a registration of a new issue of shares in its Russian
subsidiary OOO Selena-Perm. The new issue had taken place without the Company’s
authorization and had been formally registered with the Russian authorities.
This event effectively reduced the Company’s holding in its subsidiary OOO
Selena-Perm from 100% to 12% and as a consequence reduced the Company’s
reported 2P reserves by 55%. The Company publicly denounced the share issue and
attributed it to a dispute between its major shareholders, of which one group
was led by Mr. Oleg Popov and Ms. Nadezhda Popova. On January 14th 2013, Mr
Oleg Popov was elected as the Chairman of the Company and assumed effective
control over all its subsidiaries.
Representatives of the Board of Directors and several shareholders in the
Company immediately filed an appeal to the registration with the Russian
courts. In February 2013, the court of first instance in Perm rejected the
appeal. Subsequent appeals were not successful and all appeals possibilities
were exhausted. The Board of Directors has not identified any other realistic
means to restore the Company’s full ownership to OOO Selena-Perm.
The consequence of the above makes it imperative for the Company to recognize a
decrease in value of its investment into OOO Selena-Perm by year-end 2013 in
relation to partially lost assets of OOO Selena-Perm. This loss will be
reflected on the Company’s reported profit and loss for 2013 as well as its
balance sheet through impairment of asset values. The effect will be that the
Company will report an impairment of SEK 232.7 million and that shareholders’
free equity in Selena Oil & Gas Holding AB, stand-alone entity, will be reduced
by SEK 232.7 Million. Such losses are partially offset by a decrease in
liabilities to Bryum Limited, as discussed below.
The Company’s settlement with Ms Nadezhda Popova
Despite the reduction of the Company’s shareholding in OOO Selena-Perm to 12 %
in December 2012, the Company continued to receive operating information and
exercise managerial control over its Russian assets over the course of 2013 and
negotiated with the Popov’s family regarding the possibilities to resolve the
complicated situation. The financial results of subsidiary OOO Selena-Perm were
consolidated with the Company’s results in 2013.
In May 2013 the Company’s Board of Directors called for an Extraordinary
Shareholders’ Meeting proposing to its shareholders a resolution regarding a
settlement and certain transactions between the Company and its shareholder Ms
Nadezhda Popova to recover the value lost due to the share capital decrease in
OOO Selena-Perm, whereby the Company’s 100% ownership of OOO Selena-Perm would
be restored, but OOO Selena-Perm would divest a material part of its assets to
a company controlled by Ms Popova. To offset the negative impact on the
Company’s asset value, Ms Popova agreed to acquire from Bryum Limited and to
subsequently extinguish Company’s debt in the principal amount of USD 2,158
million, with all interest and penalties accrued whereon.
The validity of the above settlement was disputed by the Company’s shareholder
Mr. Gusev and a prospective court case is pending between him and the Company.
The Company has been informed by large shareholders that negotiations to
terminate the dispute amicably are ongoing. Furthermore, the Company submitted
its defences to Mr. Gusev’s petition on February 17, 2014.
Due to the pending dispute, the Company’s Board of Directors did not take any
action to carry out the settlement approved in May 2013, despite the
authorisation granted by the EGM, with the sole exception of accepting the
extinguishing of overdue loans acquired by Ms Popova from Bryum Limited. The
Board of Directors does not, however, see any legal or practical possibility to
restore the situation existing prior to December 2012 (i.e., on the asset side,
to restore 100% ownership in OOO Selena-Perm with all its pre-restructuring
assets, and on the liability side, to restore an overdue liability to Bryum
Limited with related interest and sanctions). Due to the Russian courts’
acceptance of the legality of the share capital increase in OOO Selena-Perm,
the Board of Directors firmly believes its duty to be the mitigation of the
consequences of the same to the best possible extent.
Comments to the statement from the Swedish Securities Council
(Aktiemarknadsnämnden)
The Board of Directors accepts the criticism directed to the Company from the
Swedish Securities Council (Aktiemarknadsnämnden) and pronounces its full
submission to the issued statement.
The regretful shortcomings in the Company’s reporting over the course of 2013
are to a large extent attributable to the disputes described above and the
resulting frequent changes to the operational and legal management of the
Company.
Status vis-à-vis the Company’s creditors
As has been reported during 2013 the Company has been subject to petitions on
bankruptcy charges three times through actions made by creditors. All these
cases have been settled out of court and the Company has established repayment
plans. The Company maintains operative contact with its creditors and are
actively seeking solutions on refinancing its debt.
Comments on the company’s plans for 2014
Selena Oil & Gas Holding has since September been informed of a negotiation
process between its four principal shareholders with an objective to resolve
conflicting interests and to to seek an accord on the mission as well as
capitalization strategies of the Company.
The Board of Directors has taken measures to arrange for the short-term
financing of the Company’s business plans. Such financing is under way and
plans are being made to raise minor capital through short and medium term
credit facilities.
For further information, please contact:
Magnus Stuart, CEO
+46 706 211 350
Selena Oil & Gas Holding AB (publ) (former Emitor Holding AB) is engaged in the
production and transportation of oil and gas in the Volga-Ural region in the
Russian Federation, including Perm and Udmurtia. The company is listed on
NASDAQ OMX First North Premier in Stockholm under the ticker SOGH. Mangold
Fondkommission is the company´s Certified Adviser and liquidity provider,
telephone +46 8-503 015 50.
