Sunday, 22 August 2010

Norilsk battle heats up

The conflict around Norilsk Nickel mining company has grown into a legal minefield.

The last “exchange of amenities” was Interros’ offer to buy Rusal’s 25 percent stake in the company, and it was rejected by the aluminum giant.

“You can not buy something which is not being sold – we consider Norilsk Nickel a strategic investment,” Rusal said in a statement.

“Rusal’s share is worth about $9 billion,” commented Uralsib’s analyst Dmitry Smolin.

“The mining company simply does not have such funds, and its financial situation leaves much to be desired.”

Vladimir Strzhalovski, Norilsk Nickel CEO, earlier disclosed that the company’s debt was about $3 billion, but it was to be decreased by $800 million by the year’s end.

Independent board members of the mining company said talks about a possible merger of the two companies were groundless.

Bradford Mills said in his web blog that “there [are] no … synergies from the merger as the two companies are very different businesses with no operational or marketing overlap.”

“The minority shareholders, which we met, were clear that they expected us ... to resist any combination of Norilsk Nickel and any other company unless there are compelling economic reasons,” John Holden, another independent director, said in his blog.

Against this background, Rusal has filed a suit case in Krasnoyarsk arbitration court, accusing Norilsk Nickel of a failure to provide AGM voting ballots used at the last general shareholder’s meeting, held at the end of June.

Just a few days prior to this, Rusal filed a request for arbitration against Interros in the London Court of International Arbitration.

In the meantime, Rusal also insisted on an extraordinary general meeting, which is to be held on October 21.

“Now both Interros and Rusal will do their best to win minority shareholders,” said Smolin.

Dmitry Baranov, of Finam, believes that both parties involved in the conflict will be using “tools that are more consistent with the current situation.”

“The most important thing for them now is to win minorities’ votes in October, as the June general meeting has demonstrated that these shareholders were a significant force, and their votes were crucial in the allocation of seats on the board,” he said.

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