Position of NLМК OJSC in the dispute regarding the purchase of Maxi-Group OJSC and the events associated with it
This web site outlines the public position of NLМК OJSC regarding the purchase of 50%+1 share of Maxi-Group OJSC from its founder Nikolay Maximov. The site explains the reasons why a conflict has developed and details the legal proceedings now resulting from that conflict.
Published on this site is a copy of the adjudication record which catalogues each infringement of law committed by Maxi-Group OJSC during a period before signing, during signing and after signing the Agreement between NLМК OJSC and Nikolay Maximov.
All the official statements of NLМК OJSC concerning this conflict and its participants, including the International Commercial Arbitration Court (ICAC) arbitration panel which has passed unjustified award in the dispute, are made public in the "conflict-related news" section.
History of the conflict
NLМК OJSC and Mr. Maximov entered into a Share Purchase Agreement for a controlling interest in Maxi-Group OJSC in November 2007, when the financial condition of Maxi-Group deteriorated dramatically and Mr. Maximov was forced to address, among others, the President of the Russian Federation with an open letter seeking governmental support for the Company.
Pursuant to the Agreement, the share price was determined on the basis of a formula which was devised according to representations, warranties and facts concerning the state of the Maxi-Group companies as presented by Nikolai Maximov. The funds received by Mr. Maximov from NLMK as the purchase price for the shares were supposed to have been reinvested in Maxi-Group to refinance the shareholders’ stabilisation loans and to fund the Company’s development.
In January 2008 NLMK OJSC paid Mr. Maximov an advance in amount of $300 million. Final settlement under the transaction was supposed to have been made after completion of the legal and financial due diligence of the Maxi-Group companies and provided that Mr. Maximov did not breach the representations and warranties made by him in connection with the transaction.
After receiving the advance payment N. Maximov has declined to finance the Maxi-Group activity and has additionally embarrassed the group companies by artificially-creating a debt of several-billion RUR to himself and connected persons. As a result of this, NLМК has been compelled to refinance Maxi-Group’s financial crisis 2008-2009 debts to banks, governmental agencies and labour collectives (comprising more than 15 000 people) for more than RUR50 billion. In order to defend its rights as the foremost creditor, NLМК has levied execution on shares of the Maxi-Group operating companies pledged as security for loans made by NLMK and invoked bankruptcy proceedings of the Maxi-Group holding structure.
In December 2009, after completion of the financial and legal due diligence of Maxi-Group, NLMK demanded that Mr. Maximov return a portion of the advance under the transaction in excess of the final purchase price. Mr. Maximov simultaneously filed a claim with the International Commercial Arbitration Court (ICAC) for recovery of the additional payment due from NLMK for the shares of Maxi-Group in Maximov NLMK case. At the same time, different courts and investigative authorities have proceeded with lawsuits concerning abusive practices of N. Maximov, and managers employed by him, committed before the end of February 2008, when they managed the Maxi Group and its subsidiary enterprises.