|24.10.2015 - The Board of Directors of PI Power International Limited (in liquidation) would like to update the shareholders and certificate holders regarding the status of PI Power International Limited (in liquidation) (“PI” or the “Company”) and the outlook to conclude the winding up of the Company.
Regarding the judgment of the Royal Court of Jersey in respect of the litigation instigated by former director Hans Peter Dohr against the Company, PI has paid the judgment sum and a settlement of the costs of Mr. Dohr’s counsel. The matter with Mr. Dohr is closed.
Regarding the judgment of the Royal Court of Jersey in respect of the litigation instigated by the former chairman, Mr. Vilsmeier, against the Company, PI has agreed the quantum of the payment on account of the portion of the overtime fees, expenses and security costs to be paid to the former chairman as directed by the Royal Court in the amount of EUR 100,000, including interest.
In addition, PI has agreed the quantum of the payment on account of costs of the former chairman’s counsel deriving from the judgment of the Royal Court of Jersey in the litigation instigated by the former chairman against the Company and AI Airports International Limited (“AI”) and the litigation instigated by former director Mr. Pirrwitz, against the Company and AI. Counsel for the former chairman claimed a total of approximately GBP 2.1 million in total costs for these proceedings; the Company and AI have agreed to pay an aggregate sum of approximately GBP 1.2 million. Based on the issues raised and the relative complexity of the issues, the amount apportioned to PI was GBP 500,000. The Company has submitted a claim to the Company’s D&O insurers for reimbursement of the costs of the former chairman’s counsel, in accordance with the Company’s insurance policy, which claim, the insurers have initially rejected. Discussions are ongoing between the Company and its insurers. The Board is unable to estimate the outcome of such discussions with any certainty at this time.
The only matter remaining to be concluded prior to finally winding up the Company is the collection or resolution of the arbitration award with respect to the Karpat Energo put option via PI’s wholly-owned Cyprus-registered subsidiary, Stratius Investments Limited (“Stratius”). As shareholders and certificate holders are aware, the counterparty of the put option, and the majority owner of the shares of Karpat Energo, Magyar Villamos Művek ZRt. (“MVM”), proved unwilling to honour its contractual obligations relating to the put option. Consequently, Stratius commenced arbitration proceedings to enforce its rights pursuant to the put option.
The arbitral tribunal decided in favour of Stratius and ordered MVM to pay EUR 13.2 million, plus reimbursement of costs of approximately EUR 0.4 million, plus interest. Whilst MVM disputed the Karpat Energo arbitration award and attempted to have it set aside in the Hungarian courts, the Hungarian civil law courts, including the Supreme Court of Hungary, found in favor of Stratius. Consequently, Stratius filed a transfer order to obtain direct payment from a bank account of MVM.
At that time, in August 2014, the national police office of Hungary entered the dispute, and issued an order for sequestration of the amount of the arbitration award and interest as being potential unjust enrichment of Stratius. The national police of Hungary are conducting an investigation of potential misappropriation, specifically, they are investigating an allegation that the signatory of the put option, who was at that time the chief executive of MVM, signed the put option agreement without knowledge or approval from the board of directors of MVM. The Company firmly disputes this allegation and believes it had fully adjudicated this contention at the above mentioned binding arbitration. Nonetheless, the amount of the arbitration award plus interest accrued (the sum of approximately EUR 15.8 million at current exchange rates) as well as Stratius’ claim itself, have been seized from MVM by a court executor in Hungary in December 2014 in accordance with an order of the criminal court in Hungary on sequestration.
Several procedures have been commenced before the civil and criminal courts to eliminate the sequestration order including requests for the lifting of the sequestration but the Hungarian criminal court rejected all requests for lifting and finally confirmed the sequestration order. As a result, according to Hungarian law, Stratius’ claim is not enforceable until at least such time as the investigation of the criminal complaint has been completed, and perhaps not until a criminal trial, if appropriate, has been completed and the subject of the investigation has been cleared of wrongdoing. While according to Hungarian law, the investigation phase shall be closed within two years from the interrogation of the alleged wrongdoer, the national police of Hungary have refused to provide Stratius any information or access to the investigative file, so the Board lacks any information regarding the status of the investigation procedure, or the documentation on which sequestration had been based. Should the matters under investigation ultimately be brought before a criminal court, it is anticipated that the procedure may take one or more additional years to resolve.
PI continues to attempt to resolve the collection of the arbitration award. Potential additional repayments to shareholders and certificate holders will be based primarily on the resolution of the Karpat Energo matter. However, the total amount recoverable by the Company and the timing of any such recovery cannot at this time be determined. The Company is exploring alternate options for realizing the value of the arbitration award, and will provide an update to shareholders and certificate holders in due course.
In parallel with the above processes, PI is proceeding within the regulatory obligations of Jersey and the Vienna stock exchange to complete the winding up of the Company. At the conclusion of these matters, a final repayment of capital will be made and the Company will be dissolved.
The Board intends to convene a general meeting on 3rd December, 2015 in Jersey, Channel Islands and will provide the requisite notices and documents in due course.