Dearest Dmytro Firtash, $251.2M Ukrainian Supreme Court Ruling is final & not appealable…

June 8 2021 Civil Court of Cassation of the Supreme Court relieving Odessa Port of a >$251M debt. Aggregated: $193M of the main debt & $57M penalties. Inching closer to sale & IMF prerequisite…

for those unaware I’ve had an inexplicable “thing” for Firtash (see April 2021 article) —our asymmetrical fondness is now into its 5th year. For better or worse I’ve closely followed Firtash’s protracted legal woes, of which there are many. But last week the Ukrainian Supreme Court handed Firtash a gut punch.

On June 8, 2021 the Supreme Court of Ukraine ended the multi-year clash of the Ukraine against an oligarch. Putting to rest a five year litigation battle concerning the debt and respective penalties. Firtash’s brought this on, all by himself. His Company Ostchem Holding Limited (important because this stymied the 2015 endeavor to sell the Odessa port-side chemical plant).

Central to this case is — debt a lot of debt. And a years long battle between the (Ukrainian) state-owned Oddesa port-side chemical plant and Ostchem Holding, owned by oligarch Dmytro Firtash and finding in favor of the Odessa Port Plant Public Joint Stock Company

The Court ruled in favor of favor of the plant, relieving it of a $251.2 million debt. The aggregated debt: $193 million of the main debt and the $57 million in various penalties — for gas supplied by the Cyprus-based Ostchem Holding Limited during 2012-2013. Both Viktor Yanukovych and Dmytro Firtash became insanely wealthy when Yanokovych announced the Ukrainian Government had entered an exclusive contract with Ostchem - as reported by Reuters in 2014:

According to Russian customs documents detailing the trades, Gazprom sold more than 20 billion cubic metres of gas well below market prices to Firtash over the past four years - about four times more than the Russian government has publicly acknowledged. The price Firtash paid was so low, Reuters calculates, that companies he controlled made more than $3 billion on the arrangement.

Firtash was permitted to buy gas directly from Russian and Central Asian producers. Important because this allowed Firtash to become the “new” Fertilizer King. In early 2012 Dmytro Firtash’s Ostchem enterprise imported 6 bcm of gas, on average Russia set a paltry price of $280 per 1,000 cubic meters. And then turned around and sold the natural gas to Odessa Port often two or three times more that originally paid. As the money started to flow - in late 2012 Firtash’s Ostchem announced its intention to increase its imports (from mainly Russia) to 8 bcm year and to sell one-quarter of this to enterprises beyond Firtash’s companies.

It also granted Odessa Port Plant litigation cost. As previously noted last week the Ukrainian Civil Court of Cassation of the Supreme Court “affirmed: the 2016 Arbitration Ruling - you’ll need to hit the translation button, link to the (Ukrainian) Supreme Court’s announcement

On June 8, 2021, the Civil Court of Cassation of the Supreme Court, following the appeals of PJSC "Odessa Port Plant" and the State Property Fund of Ukraine, overturned the decision of the Kyiv Court of Appeal of April 24, 2019, in satisfaction of the application of Holding Limited

…Republic of Cyprus refused to grant and grant permission to execute the decision of the Arbitration Institute of the Stockholm Chamber of Commerce of July 25, 2016.

The following findings:

1. Appeals of the Public Joint Stock Company "Odessa Port Plant" and the State Property Fund of Ukraine against the decision of the Kyiv Court of Appeal of April 24, 2019 to satisfy.

2. To cancel the decision of the Kyiv Court of Appeal of April 24, 2019.

3. Satisfy the application of Ostchem Holding Limited (Ostham Holding Limited, Republic of Cyprus) for recognition and permission to execute the decision of the Arbitration Institute of the Stockholm Chamber of Commerce of July 25, 2016 in case № V2016 / 065 to refuse.

4. To recover from Ostchem Holding Limited (Osthem Holding Limited, Republic of Cyprus) in favor of the Public Joint Stock Company "Odessa Port Plant" costs for filing an appeal in the amount of 1,921 (one thousand nine hundred and twenty-one) UAH 00 kopecks.

5. To recover from Ostchem Holding Limited (Osthem Holding Limited, Republic of Cyprus) in favor of the State Property Fund of Ukraine the costs of filing an appeal in the amount of 1 921 (one thousand nine hundred and twenty-one) UAH 00 kopecks.

6. The full text of the resolution will be made within ten days.

7. The resolution comes into force from the moment of its signing, is final and is not subject to appeal.

Chairman Yu. V. Chernyak

The court decision will be available in the Unified State Register of Court Decisions (the full text of the resolution should be available around June 18, 2021)- https://reyestr.court.gov.ua/  I went ahead and translated the notice from Ukrainian to English and uploaded the notice to a public drive, filed under my Firtash Folder

With this recent ruling Firtash is out $250,000,000.00 — but to fully understand just how rich Firtash became — in 2008 Ukraine President canceled the Odessa Pre-Port Plant sell-off. While largely reported (at the time) —see 2009 Reuters report —

The Government of Ukraine has attempted to “privatize” the PJSC Odesa Portside Plant for years. See the 2015 Ukrainian State-Owned Enterprises: Privatization Opportunities presentation, found here ¹ ²

To provide you additional factual background - sometimes you can find a lot of facts in SEC filings — especially if involves Credit Suisse Securities (Europe) Limited and Bank of New York —see pages (marked) 23, 79, 80 also uploaded to my public drive

The sale of the 99.52% shareholding in JSC “Odessa Port Plant” (with a nominal value of UAH 0.8 billion) was expected to take place in September 2007 with an initial sale price of UAH 2.5 billion. Sales of shareholdings in six regional energy distribution companies were expected to take place in 2007 following the approval of the Concept for Privatisation of Objects of Power Industry.

However, in September 2007, the President suspended the effectiveness of the resolutions of the Cabinet of Ministers of Ukraine permitting the sales of shareholdings in JSC “Odessa Port Plant” and the six regional energy distribution companies, and asked the Constitutional Court of Ukraine to opine on the constitutionality of these resolutions; the sales were cancelled in October 2007 and the Constitutional Court of Ukraine terminated review of the President’s applications in January 2008.

Then Ukrainian President Viktor Yushchenko repeated cancellations of the Odessa Port sale had an impact not on just the Ukrainian Economy but it rippled throughout the global economy too.

Due to the current level of actual 2009 privatisation receipts, it is unlikely that budgeted privatisation receipts will be met in 2009 without further privatisation of major assets; only a limited number of major assets is expected to be privatised by year end…

Given the history of the privatisation process for assets such as OJSC “Ukrtelecom” and JSC “Odessa Port Plant” as well as the global economic and financial downturn…

The full text of the Supreme Court Ruling/resolution will be made within ten days (of the June 8, 2021 publication) so folks might want to save the date - June 18, 2021. I would keep a lookout for the “privatization” of Odessa Port.

In September 2020 re-launch of the Odessa Port Plant (and other State Owned companies) privatization now that the $250+M debt is no longer looming large over the Government’s nearly 14+ year endeavor to sell.
https://www.kinstellar.com/source/files/articles/articles_000209.pdf -

full disclosure and in the spirit of transparency and ethics I think it’s important to inform you that Kinstellar:

Kinstellar has extensive experience supporting privatisation projects in Ukraine. Our lawyers supported the landmark privatisation of PJSC "Odesa Port Plant" in 2015–16 and have represented the State Property Fund of Ukraine in this project since 2018. In July of this year, we represented a foreign investor in preparation for the small-scale privatisation of the Dnipro Hotel. We have also been involved in the development of Ukrainian privatisation legislation and are therefore well acquainted with regulatory, corporate, commercial, compliance and other related issues accompanying the privatisation process in Ukraine. We also have extensive experience in competition law and in obtaining merger control approvals for clients when acquiring assets in Ukraine, which is an important step in the privatisation process.

On September 9, 2020 the Cabinet of Ministers approves priority action plan for 2020

On September 22, 2020 - Ukrainian President Zelenskiy signed the Amendments to the Law of Ukraine "On Privatization of State and Communal Property³" (concerning parliamentary control over privatization of state property) -you’ll need to hit the translation button.

I think you now have a better understanding of why last week’s ruling was/is important and the added bonus of Firtash can’t appeal is equivalent to the sprinkles on a sundae. Unclear And if I did this correctly this article will publish while I’m getting ready for my weekly teams call. Also Firtash folder on my public drive has a decent amount of court filings. I genuinely do not understand how the MSM missed this important bit of news, beyond the sparse local Ukrainian news outlets. Because as previously explained last week’s ruling is pretty significant.

My motto for Mondays “not today Satan…not today…” sometimes is “I’m sorry my early onset anal glaucoma…precludes me from <insert adverb>…”

-Filey

1. In the event you are concerned about the provenance of the 2015 document - I sourced the document directly from the “official” Ukrainian Government’s website because I genuinely believe in showing the origination of source documents

https://www.me.gov.ua/Documents/Download?id=53f9cd3a-ec83-4ddd-bfef-4aa3e3396b2f

2. Recent Government of Ukraine -High-performance State Enterprise- published in late 2017 - https://www.kmu.gov.ua/en/reformi/ekonomichne-zrostannya/prodazh-neefektivnogo-derzhavnogo-majna

3. The Official Government of Ukraine - legislative -process of the amendment signed by President Zelenskiy https://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=68959