ZTMC returns to state ownership: decision of appellate court comes into legal force – SPF
The Central Economic Court of Appeal on November 30, 2021 confirmed the decision of the lower instance court to return 49% of shares of Zaporizhia Titanium Magnesium Combine (ZTMC), which belonged to Dmytro Firtash's Tolexis Trading from Group DF, to the management of the State Property Fund (SPF) of Ukraine.
"The victory in the court of appeal is the result of the hard work of the team of the State Property Fund and the Specialized Anti-Corruption Prosecutor's Office (SAPO)," Head of the SPF Dmytro Sennychenko said quoted in a press release on Tuesday.
At the same time, he added that the decision to return ZTMC to the state has already entered into legal force and will be implemented in the near future.
"The final decision to return ZTMC to state ownership will allow attracting a competent and honest investor who will turn it into a powerful industrial asset thanks to continued modernization and effective management," Sennychenko said.
According to the press release, in August 2021, the Economic Court of Zaporizhia region, on the claim of the SAPO in the interests of the state represented by the State Property Fund as a plaintiff, established that Tolexis Trading Group, after receiving in 2013 a share of the newly created ZTMC LLC, did not met its obligations to provide $110 million of investments in the modernization of the enterprise during 2013 - the first quarter of 2015.
The court proved that the enterprise was transferred to the management of the managers close to the investor, despite the fact that the state's share in it was 51%. The appointed managers spent the raised $110 million to pay off previously created energy debts of ZTMC to creditors associated with Group DF. Later, the funds were withdrawn to the accounts of offshore companies. Only UAH 20 million was allocated for the modernization of the enterprise.
The joint actions of the SPF and the new management of ZTMC have already made it possible to eliminate corruption schemes, to unlock the company's accounts, to conclude direct contracts for the supply of electricity with state-owned generating companies, as well as to restructure existing debts. In addition, modernization has begun and the first new bipolar electrolysis cell is already in operation, which saves about 30% of electricity.
However, today the situation with ZTMC is still critical due to a sharp rise in energy prices and billions of dollars in electricity debts accumulated by the previous leadership, the SPF said.