Uralchem Cancels IPO After Failing to Meet Ecological Standards
MOSCOW, May 20, 2010 /PRNewswire/ -- A group of NGOs has been sounding warnings over one of this year's largest IPOs before the offering was called off. The preliminary offering prospectus of Russian chemical fertilizers producer Uralchem glossed over serious environmental and legal risks, said the coalition of NGOs (Socio-Ecological Union, Russia; BankTrack, Netherlands; Les Verts, France; Platform-London, UK; The Berne Declaration, Switzerland; International Accountability Project, USA; Fond Grazhdanin, Russia). Their research uncovers significant violation of environmental regulations by the company, which could lead the Russian Ministry of Natural Resources to force plant closures.
The coalition addressed the IPO bookrunners (UBS, Morgan Stanley, and Renaissance Capital) with an open letter urging them only to support the IPO if the company seriously commits to resolving its social and environmental problems. According to the report, Uralchem's disregard for environmental safety has lead to several fatal accidents in the past year, and seriously damages the quality of air and water in the towns of Kirovo-Chepetsk, Voskresensk and Berezniki.
In Voskresensk, a 200m tall mound of phosphogypsum, illegally heaped by Uralchem's plant, threatens to leak toxic phosphoric acid into Moscow River. In 2010 alone, the Russian Ministry for Natural Resources made three announcements that may herald a criminal court case against Uralchem and its Voskresensk plant. This is only one in a host of problems (environmental crimes, financial machinations, neglect of equipment and employees, and various corresponding court cases) that, according to the NGOs, should ring loud alarm bells for the company's bookrunners and potential future investors.
Uralchem's plans to build a reprocessing plant in Dieppe, France, not only met strong resistance from locals and environmentalists (Les Verts, Europe Ecologie) but also attracted the attention of a number of MPs. This political risk was likewise overlooked by the preliminary offering prospectus.
Commenting on postponement of the IPO, Maxim Shingarkin, representative of Socio-Ecological Union, said: "We would like to warn investors who plan to put their money in a company with such a reputation in the future. We think that the money made on the IPO will be used to pay off the company's debts, while Uralchem's plants continue to choke whole towns and produce fertilisers which fail quality control by the lorry load."
Socio-Ecological Union is an international, nongovernmental, nonprofit public ecological association.
CONTACT: Maxim Shingarkin, Socio-Ecological Union, +7-495-6083094
SOURCE Socio-Ecological Union
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