Ferrexpo Plc has announced that it has lost an appeal in a lawsuit with the former shareholders to invalidate a contract for the sale of a 40.19% stake in its largest Ukrainian asset, Poltava Ore Mining and Processing Plant (PGOK).

"Ferrexpo Plc hereby announces that the company has been informed of a ruling in relation to the claim made to invalidate a share purchase agreement concluded in 2002 in respect of shares in Ferrexpo Poltava Mining. Pursuant to the 2002 share purchase agreement a 40.19% stake in FPM was sold to nominee companies that were at that time owned by the controlling shareholder of the group. In May 2021, the court of first instance ruled in favor of Ferrexpo AG (a wholly owned subsidiary of Ferrexpo), and dismissed the claim, with an appeal filed by the claimants in June 2021," the company said.

"The company has now received a judgement from the appeal court in respect of the claim, which states that the share purchase agreement concluded in 2002 is invalid and the 40.19% stake in PGOK shall be transferred to the claimants. Ferrexpo will proceed with protecting the interests of the company and its shareholders, and is exploring all options, including its right to appeal this decision to the Supreme Court of Ukraine," Ferrexpo said.

"Based on the details of the judgement provided by the appeal court, it is management’s view that Ferrexpo AG has compelling arguments to defend its position," the report says.

As reported, in 2002, four non-resident companies from VS Energy (Gilson Investments, Calefort Developments, Emsworth Assets and Trimcroft Service) sold their collectively 40.19% stake in PGOK to persons associated with the current majority owner of Ferrexpo, Kostiantyn Zhevaho. Then several additional issues were carried out, as a result of which a series of other resales, as well as a forced buyback of shares from minority shareholders under the squeeze-out procedure, Ferrexpo, listed on the London Stock Exchange, became the sole shareholder of PGOK.

In 2005, these four companies filed a lawsuit to invalidate the sale and purchase agreement and conduct additional share issues. At the same time, Gilson sought to restore its stake in PGOK to 6.59%, Emsworth and Calefort - 12.14% each, Trimcroft Services - 9.32%. The Higher Economic Court of Ukraine in February 2015 upheld the earlier decision of the Supreme Court of the country and the position of PGOK in a corporate dispute that lasted for about 10 years, refusing the plaintiffs.

However, at the end of 2020, these former shareholders of PGOK again appealed against this transaction in the Ukrainian court.