Abramovich takes Norilsk stake to end oligarch feud

4th December 2012, Comments 0 comments

Russian billionaire and Chelsea football club owner Roman Abramovich is acquiring a 7.3-percent stake in mining giant Norilsk Nickel to help end a long-running shareholder dispute, a statement said on Tuesday.

Analysts said that Abramovich was moving into Norilsk Nickel's capital as a neutral referee to help end the bitter feud between fellow oligarchs Oleg Deripaska and Vladimir Potanin.

The squabbles at Norilsk, Russia's largest diversified mining and metals company, have worried Russian President Vladimir Putin who said in 2010 what mattered was sorting out problems and not who owned the biggest stake.

The Hong Kong-listed aluminium producer Rusal controlled by Deripaska said it had reached an agreement with Potanin's Interros over the management of Norilsk Nickel.

Part of the deal is that Abramovich's Millhouse investment vehicle will acquire 7.3 percent in Norilsk Nickel at market prices, said Rusal and Interros in a joint statement.

Financial details were not disclosed although at current market prices such a stake would be worth $2 billion (1.5 billion euros).

Dinnur Galikhanov, metals analyst at the Aton investment bank, said Deripaska had invited Abramovich to take a stake in the company to act as a neutral balance between the other main shareholders.

"He was invited as a balancing force so that neither one of the other two shareholders have too much control."

Abramovich "is the third party that had not been previously involved in the conflict and could be neutral," Galikhanov told AFP.

Analysts at VTB Capital in Moscow said that Abramovich's entry would be positive for corporate stability.

"We believe governance will improve in the long term. Peaceful settlement and another large shareholder will allow Norilsk to properly elaborate and articulate its strategy," they said in a note to clients.

"The agreement has a good chance of solidifying the new Norilsk governance structure."

Abramovich is seen by most commentators as a Kremlin-friendly oligarch keen to steer clear of causing political controversy.

It is not clear if his entry into Norilsk was blessed by the Kremlin.

Deripaska currently holds 25.13 percent in Norilsk Nickel while Interros holds 28 percent. Deripaska's Rusal is the world's largest aluminium producer.

Disputes over corporate governance prompted Rusal to file arbitration proceedings in a London court against Interros in 2010.

The problem has been rumbling for years and a previous accord to end their conflict in 2008 only lasted a few months.

The joint statement from Rusal and Interros said that all the legal action that marked the feud has now been frozen with the agreement.

The deal will also see Potanin become chief executive of Norilsk Nickel, the world's largest producer of nickel and palladium, replacing Vladimir Strzhalkovsky who had been named in 2008.

Strzhalkovsky, a former Soviet KGB officer, was said to have bad relations with Deripaska in what was one of the sources of the conflict.

The agreement aims to "improve the existing corporate governance and transparency of the Norilsk Nickel, to maximise profitability and shareholder value and to settle the disagreements," Rusal said.

It said that to ensure the "sustainability of the management and the long-term commitment regarding the decisions", Interros, Rusal and Millhouse have agreed to retain the majority of their stakes for five years.

Under the deal, Rusal is to have four seats on the board, Interros also four, Abramovich's Millhouse three, plus two independent members.


© 2012 AFP

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