* Marks end of three-month governance review
* CEO withdraws resignation, chairman stays on
* ENRC says founders support independent board
(Updates after outcome of board meeting, adds quotes)
By Clara Ferreira-Marques
LONDON, Sept 28 Miner ENRC ENRC.L ended its
long-awaited governance review on Wednesday, unexpectedly
confirming both the chairman and chief executive in their roles
as part of a trimmer board that it hopes will revive its
ENRC has been in the throes of the review since June, when
long-running tensions between the group's founder shareholders
and some board members split over into a public spat that saw
two well-known independent non-executive directors voted off
the board, hitting the miner's shares as investors fretted over
its corporate governance.
Key to the outcome of the review was the position of the
group's three main shareholders -- Alexander Mashkevitch,
Alijan Ibragimov and Patokh Chodiev -- and any decision or
pressure from them to become more closely involved. Together
they own 43.8 percent of the London-listed miner.
Mashkevitch had been seen as a possible contender for the
chairman's role, replacing independent incumbent Johannes
Sittard, who had been expected to step down. The company's
brokers last month asked the UK regulator to consider whether
Mashkevitch was a "fit and proper" person, a key test for UK
That application will now be withdrawn, ENRC said. The
company said Mashkevitch had "absolutely not" been turned down
by regulators, but said a decision had been made instead to
back a fully independent board.
"We made a firm commitment, in the interests of all the
shareholders, that we must have a strong board that is
independent," board member Mehmet Dalman, appointed senior
independent director as part of Wednesday's changes, said.
"The founders and non-founding shareholders support the
thesis that a strong independent board is the way forward."
Sittard said the founders understood they did not have a
role in the day-to-day running of the company, though they were
involved in discussions and kept abreast of developments as
with all shareholders.
While some investors had supported a possible move by
Mashkevitch to the board, many had expressed concern that
replacing the experienced Sittard with a non-independent voice
could prove negative for minority shareholders, who own less
than 20 percent of the stock, and a backward step.
After a lengthy board meeting on Wednesday, the company
announced it had confirmed both veteran Sittard as chairman and
Felix Vulis as chief executive. Vulis withdrew his plans to
step down, which had been announced in February.
The three-month review follows a separate, critical
evaluation by independent governance specialist ICSA earlier
this year, and has focused on the composition of the board and
its structure. Before the June shake-up, the board was
14-strong, a size seen as too cumbersome by some.
The board has now been trimmed to 11, including former
Lonrho executive Terence Wilkinson, who has been brought in as
a new independent non-executive director.
The results of the three-month study had been awaited by
analysts as a potential catalyst for the miner's shares, which
have underperformed the sector by some 20 percent since the
start of the year. But it was unclear whether the changes will
be dramatic enough to impress investors.
Shares in the group closed down 3.3 percent, marginally
less than the broader sector, before the results of the board
meeting and of the review were announced.
ENRC said it had held conversations with its top
institutional investors, which include Blackrock, Legal &
General Investment Management and AXA Investment Managers,
throughout the summer review.
"I have spoken to quite a few shareholders here in the UK
(during) the process, and one overriding message I get from all
of them is that the independence and the strength of the board
is very important," Dalman said.
"If we did not come up with this conclusion it would have
been a very difficult discussion, but I am 100 percent
convinced that shareholders I have spoken to will be supportive
of this composition of the board."
The key for investors will be whether this will unlock what
they see as ENRC's value -- the value of its portfolio of
high-potential, low-cost assets which include Brazilian iorn
ore, Mozambican coal and Congolese copper.
ENRC has spent more than $2 billion over the past two years
on acquisitions that, analysts say, have neither fully fed
through to the bottom line nor to its shares.
"We believe this a strong, independent and unified board
and this will give the board the strength to look to the future
of the company," Sittard told reporters.
"The performance of the company was never affected ... by
these issues. Performance is very strong, we have performed
well in the last month and this is proof we have a strong
(Reporting by Clara Ferreira-Marques; Editing by Kate Holton,
Jon Loades-Carter and Bernard Orr)