Photographer: Guenter Schiffmann/Bloomberg

Banking Heir Faces Yet Another Showdown in Fight for Gold Miner

  • Russian billionaire Vekselberg is trying to oust Hambro
  • Hambro has chaired gold miner Petropavlovsk since 1994

Peter Hambro, the 72-year-old descendant of a wealthy line of Anglo-Danish bankers, is getting used to fighting for his professional life.

Having saved the company he’s chaired for more than 20 years from the brink of collapse in 2015, he’s now trying to fend off a hostile group of his biggest shareholders calling for his ouster after years of poor performance. That battle is due to come to a head next week’s annual shareholder meeting of Petropavlovsk Plc, Hambro’s Russia-focused gold miner that’s now worth about one-tenth of its $3 billion peak almost a decade ago.

Hambro plans to step down as executive chairman though is standing as an executive director at next week’s meeting.

“I’m not fighting this to stay in my job,” Hambro said in a phone interview from London on Tuesday. “I’m fighting this because I think it’s unreasonable for these people to gang up and take over the company without paying shareholders a premium.”

Hambro’s challenge comes from Russian billionaire Viktor Vekselberg. His investment company Renova Group, which owns assets in metals, mining, energy and telecommunications, together with other shareholders M&G Investment Management Ltd. and Sothic Capital Management LLP hold about 30 percent of Petropavlovsk. They’ve been pushing Hambro to step down as chairman and have now proposed four new directors. They plan to vote against Hambro’s appointment as a director as well as the re-election of three current directors.

Renova has said the current board lacks a focus on corporate governance. M&G, which acquired its stake in a debt for equity swap in 2015, has said there have been “multiple strategic mistakes” since 2014 that have delayed the company’s recovery.

Raise Standards

“We’re doing this to try to raise corporate governance standards at Petropavlovsk to improve the value of our holdings for our end investors who are U.K. pension holders,” M&G said in a statement Tuesday.

Still, Hambro has won support in recent days from shareholder advisory groups Institutional Shareholder Services Inc., Pensions & Investment Research Consultants Ltd. and Glass, Lewis & Co. who recommend Hambro’s re-election to the board.

Renova has proposed the appointment of Bruce Buck, chairman of Chelsea Football Club, and Vladislav Egorov, while M&G and Sothic have put up Garrett Soden and Ian Ashby, who was recently appointed to Anglo American Plc’s board. PIRC said that it did not consider Renova’s two candidates as independent and that there was no information for Sothic and M&G’s selection process.

Petropavlovsk have proposed that current director Andrew Vickerman is elected as non-executive chairman, and want Hambro to continue as an executive director.

Dissenting Investors

“We know they have a lot of stock,” Hambro said of the shareholders trying to remove him. “It’s a question of how the rest of the world views the advice being given by the voting agencies.”

Vekselberg is Russia’s fourth-richest person worth an estimated at $15.2 billion, according to the Bloomberg Billionaires Index. He made most of his fortune in oil and aluminum. While he exited the oil business in 2013, together with partner Len Blavatnik, he controls almost 16 percent of aluminum producer United Co. Rusal.

Petropavlovsk was forced to tap shareholders for emergency funds in 2015 after its stock slid 99 percent within five years. The London-based company, now worth $325 million, has cut costs and shifted to focusing on lower, but more profitable, gold production.

In early 2015, Hambro, who’s so closely associated with the company that until 2009 it was called Peter Hambro Mining Plc, pleaded with shareholders to support a resolution that allowed it to raise $335 million by selling shares. On that occasion he had to fight Sapinda Holdings, which opposed the refinancing plan.

Hambro said that was a more difficult fight.

“In 2015, we were really, really fighting. It was a nightmare,” said Hambro, who along with Chief Executive Officer Pavel Maslovskiy partly underwrote the offer. “That was a miserable time, but by God we backed this thing with our own money, big chunks of cash, and we turned it around.”

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