A Yerevan court ordered Gagik Tsarukyan’s Yerevan Ararat Brandy-Wine-Vodka Factory (YABWV) to pay Stefan Laxhuber, the CEO of the German investment firm Ostinvestor, 14.8 million AMD ($36,662) in compensation in a case that dates back to 2009.
Laxhuber, the CEO of Ostinvestor, sued Tsarukyan for swindling his company out of shares it purchased in YABWV.
Hetq covered the legal case in a July 20, 2009 article titled “German Firm Loses Shares in Armenian Company Owned by Gagik Tsarukyan”.
In May 2006, Ostinvestor purchased 1,520 shares of YABWV. This amounts to 3.2% of the company’s outstanding shares.
At a special October 12, 2008, stockholders’ meeting it was decided to consolidate the shares of YABWV by issuing one new share for each 2363.5 held at a valuation of 18,908,000 dram (approximately 45,212 euros.)
Before the consolidation of YABWV shares, there were 124 stockholders. Some 82% were held by Gagik Tsarukyan, 10% by MultiGroup and about 7% by remaining stockholders. Ostinvestor held 3.2%.
Given that Ostinvestor only held 1,520 shares and one new share was to be the equivalent of 2,363.5 shares, the German firm wasn’t able to secure even one share of the new stock issue.
As a result of the share consolidation, Ostinvestor and the other minor shareholders wound up with fractional shares. This means that these shares were to be sold back to the major holders.
During the special YABWV meeting, a formula for the resale of these fractional shares was worked out. The firm En-Audit pegged the market value of one full share at approximately 69 euros. Ostinvestor, however, had spent 184 euros per share and thus wound up paying 279,680 euros for its original 1,520 shares.
Taking into account that Ostinvestor owned 1,520 shares before the consolidation, the amount accruing from the fractional shares buyback equals 27,467 euros.
The German company refused to sell its shares at 69 euros per.
"This is just about 20% of the price of the last trades and our purchase price," Laxhuber said. "Furthermore, the company has done significantly well since then. And less than 2% of the real market value. With this step MultiGroup intentionally tried to deprive minor shareholders of their owner rights, obviously breaking the Constitution and Legislation of Republic of Armenia."
In yesterday’s decision, the court refused the plaintiff’s demand that the original 1,520 shares be restored to Ostinvestor.
The firm’s lawyer, Davit Danielyan, argued that the court had no right to set a fixed cash amount as compensation and that defining such a price is a matter for the compulsory stage of the case.
“All we asked was for the court to oblige Yerevan Brandy to pay compensation of equal value. We made no financial demand,” said Danielyan.
The court also obligated Ostinvestor to pay some 2.8 million dram in court fees and professional services.
Danielyan says they will file a suit with the Court of Appeals.