Updated May 16, 2008

   Associated Chemical Company (ACC) Uralchem OJSC owned by Dmitriy Mazepin wants to take control over Voskresensk mineral fertilizers OJSC (VMU). ACC has applied to Federal Antimonopoly Service (FAS) for a purchase of 72% VMU stocks. The same holding belongs to AgroProdMir Group, and 28% VMU stocks belong to Phosagro holding. If Uralchem bought securities at AgroProdMir, it would be burdened with the conflict of the latter with the minority shareholder.

   Head of the Office relevant department Teymuraz Kharitonashvili said Uralchem had applied to FAS for a purchase of 72% VMU stocks. As it has been already reported, VMU assets are currently estimated within the transaction framework. According to sources aware of the situation, the enterprise stocks are not listed and it is preliminary estimated at $400 million. However, chairman of directors’ board and VMU co-owner Sergey Melnikov specifies "there have not been any agreements about the enterprise sell yet". In Uralchem refused to comment this information.

   VMU (Moscow area) produces ammophos, ammonia, sulphuric and phosphoric acids. VMU output is around 700 000 tons of mineral fertilizers a year. According to 3Q 2007 VMU earnings totaled RUR 4,84 billion, net income was RUR 475 million.

   ACC Uralchem controls 95% of Kirovo-Chepetsk Chemical Works OJSC and 95% of Azot OJSC (Berezniki). In 2007 Uralchem earnings totaled $700 million; net income was $91 million. The company plans to hold IPO in autumn within which it can sell around 20% stocks.

   Uralchem can buy VMU in the heat of the company stockholders conflict. In spring 2006 Phosagro Holding has sold 51% VMU stocks to AgroProdMir Group, which in a year has bought 21% stocks more out at holding. Now Phosagro owns 28% VMU stocks and has an option for 14,8% stocks repurchase within one-four years. This year Phosagro decided to take an option, but AgroProdMir contested its legality, whereupon a court made a ruling about seizure of stocks in dispute. But at the end of April ROST Registrar keeping a register of VMU stockholders has sent a letter to arbitration court of Moscow about impossibility of their seizure.

   "As soon as the conflict with Phosagro had started, the enterprise faced troubles with an apatite concentrate supplies", says Mr. Melnikov. OJSC Apatite comprised with Phosagro is the monopolistic concentrate supplier at the Russian market. Uralchem that does not have its won phosphorous raw material also can solve this problem only by means of talks with Phosagro. But in a prospect ACC can provide VMU with its own raw materials. In 2007 Uralchem has been granted a license to develop Sordinskoe phosphate field. It is planned to start extraction in 2010, and its volume should total around 2 million tons of phosphorous ore a year.

   Head of AtlantaPioglobal analytical department Georgy Ivanin reminds that EuroChem has raw materials also, as well as Acron in a prospect. "But currently Apatite remains the main supplier of raw material to the enterprise, and a new stockholder will depend on minority shareholder", considers Mr. Ivanin. In Andrey Fedorov opinion from Alfa Bank Uralchem cam avoid the conflict by purchasing VMU controlling stock interest in order not to get involved in arguments concerning its 14,8% stocks.