In response to recent enquiries from shareholders, we have prepared this Q&A to clarify a number of issues arising over the last few months.
Q. Why has Mr Sergey Kononov been appointed as the President of Urals Energy LCC?
A. Mr Kononov, whose appointment was approved by the Board at the time as part of an interim arrangement pending appointment of a new CEO, has, the Board believe, the necessary skills and contacts to act as the President of Urals Energy LLC.
The position of president of Urals Energy LLC is a Russian legal requirement and is closely supervised by the Board.
Q. Why have Mr Dyachenko and Mr Ogarev not resigned from the Company as stated in the RNS dated 31 November 2014?
A. As previously announced Mr Leonid Dyachenko and Mr Aleksey Ogarev have indicated to the Board that they intend to stand down as Directors of Urals Energy once appropriate replacements have been identified and appointed. As the search for new Directors is still ongoing Mr Dyachenko and Mr Ogarev have agreed to remain as directors until such time as suitable appointments are made.
The Board anticipates the search for new Directors will take some time as the Board is intent on appointing the right new Directors. The Board is looking to recruit a CEO who has both suitable experience of the oil and gas industry and of running a Russian business.
Q. Why has Mr Dyachenko replaced Mr Uzornikov as Interim CEO?
A. Mr Dyachenko has been appointed interim CEO to allow Mr Sergey Uzornikov to concentrate on his continuing role as the Company's CFO and day-to-day operating activity as VP Finance of the managing company. Furthermore, since Mr Dyachenko has previously held the position of CEO he is well qualified to hold the interim CEO position until a suitable replacement is found.
Q. When will a full-time CEO be found and why have the two new Board Directors from Adler not yet been appointed?
A. The appointment of a new CEO will inevitably take time since it is necessary to identify the right candidate; agree terms and for that candidate to undergo the appropriate due diligence and checks.
It is also important that any directors nominated by Adler are right for the role and also undergo the appropriate due diligence and suitability checks.
Q. Has Adler Impex presented its strategy and/or intent to the Urals Board?
A. As announced on 8 July 2014, Adler remains supportive of the Urals Board and its strategy, which continues to be to run in the best interest of all shareholders to achieve the best value for their investments.
Q. Why has the Company settled with Mr Rovneiko, when recent judgements in court cases have been in favour of the Company on the ADRA and we won the Arbitration in London?
A. The Board has taken into account a number of factors which have led to the decision to settle all outstanding litigation with Mr Rovneiko.
Whilst the Board's views on the ADRA have been well documented, based on the legal advice from Russia and Cyprus the cost and management time required to remove the ADRA would have materially detracted from management's ability to implement Ural's strategy. In addition, with the ADRA in place the Company's ability to raise money (by way of debt or equity) would be non-existent. Finally, based on legal advice the Board understand that any compensation payable by Mr Rovneiko to the Company would have been minimal.
Despite the best efforts by the Company and considerable expense it has become apparent that it will not be possible for the Company to recover any meaningful amounts from Mr Rovneiko following the successful arbitration award. In light of this, the Board believes that the management's energy is better focused on implementing the Company's strategy.
Taking these matters together, the settlement with Mr Rovneiko will allow the Company to focus on its declared strategy of seeking to optimise its existing assets through a new development plan and pursue M & A opportunities.
Under the settlement agreement, both parties agreed to keep the terms confidential.