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Today's paper. Last Updated: 02/16/2012

RusAl to Oppose Putin Ally At Norilsk

Bloomberg
Heating up a battle for control of Norilsk Nickel, RusAl said late Thursday that it would oppose outgoing Federal Tourism Agency chief Vladimir Strzhalkovsky, a longtime ally of Prime Minister Vladimir Putin's, becoming CEO of the miner at a board meeting Friday.

In a statement, RusAl said appointing someone who had "nothing to do with the metals and mining sector or any experience of managing a large industrial company ... contradicts the principles of corporate governance and inflicts severe economic and reputational damage on the company and its shareholders."

Opposing Strzhalkovsky, who has been nominated as CEO by Norilsk chairman Vladimir Potanin, Norilsk's biggest shareholder, could bring RusAl's majority shareholder, Oleg Deripaska, into conflict with high-ranking government officials.

In an interview Thursday, Deripaska ruled out a two-way RusAl-Norilsk merger under current conditions and rejected outright a three-way tie-up with iron and steel group Metalloinvest.

Deripaska also accused Potanin of owning more than 30 percent of Norilsk -- a situation that would require Potanin to make a mandatory offer to buy out the other shareholders.

"We have come to understand that Potanin has taken control of the company. We have undertaken an analysis that shows he has the support of 34.7 percent at his disposal," Deripaska said, Reuters reported.

RusAl bought 25 percent of Norilsk in April from Mikhail Prokhorov's Onexim Group.

Deripaska's interview followed a RusAl statement earlier Thursday, in which the company launched a wide-ranging attack on Potanin, decrying what it called mismanagement at Norilsk during his "almost total control" of the miner and called on the Federal Financial Markets Service to investigate whether Potanin owned more than 30 percent of the company.

Norilsk rejected the criticism as unfounded in a statement late Thursday.

Thursday's barrage of conflicting claims came two days after Onexim said it had agreed to sell 16.7 percent of Norilsk to Interros in a $10 billion cash-and-asset swap that would also give Prokhorov control of Polyus Gold.

Potanin's Interros holding said in a statement late Thursday that it was not planning to strike any deals with Prokhorov and accused RusAl and Onexim of trying to manipulate stock markets through their statements.

A spokesman for Interros earlier declined to comment on RusAl's allegation that Potanin owned 30 percent or more of Norilsk.

Rob Edwards, a metals and mining analyst at Renaissance Capital, said RusAl's statements were likely trying clarify the situation at Norilsk, including over Prokhorov's offer to sell the 16.7 percent stake to Potanin.

"This is a message to Potanin, saying, 'Look, no matter how ridiculous the situation with Prokhorov's 17 percent looks, you have to make some kind of comment on that,'" Edwards said.

"RusAl is genuinely concerned regarding board control of Interros, the mass exodus of the leadership of the company and the fact that the new CEO is not the right guy to manage an international mining company."

A source at Interros said Tuesday that the company had not received any offer from Prokhorov to sell 16.7 percent of Norilsk.

It remains unclear how Prokhorov could have acquired a 16.7 percent stake, prompting some analysts to speculate that he bought back some of the 25 percent stake from RusAl.

RusAl indicated Thursday that it still had its stake.

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