Abramovich not to sell Nornickel stake on stock exchange

Abramovich not to sell Nornickel stake on stock exchange
Roman Abramovich

According to RBC, Roman Abramovich, who was unable to sell 4% of Norilsk Nickel to Vladimir Potanin and Oleg Deripaska due to the decision of the London court, decided not to sell this package on the stock exchange. He wants to sell it at a higher price.

Abramovich remains in Norilsk Nickel

Roman Abramovich, Alexander Abramov and Alexander Frolov do not sell their Norilsk Nickel shares (6.3%) at the current market price. RBC quotes a source close to one of the shareholders of the company and confirmed by a businessman who is familiar with their plans.

Abramovich, Abramov, and Frolov are generally satisfied with their package, the prospects for new sanctions against Russia are not intimidating, according to RBC interlocutors.

Abramovich and partners became shareholders of Norilsk Nickel in 2012 putting an end to the long-standing conflict between UC Rusal of Oleg Deripaska (now owns 27.8% of Norilsk Nickel) and Interros of Vladimir Potanin (32.1%). After that, the main co-owners of the company entered into a ten-year shareholder agreement, the guarantee of which was Abramovich.

Under this agreement, Crispian Investments of Abramovich and Abramov should not have reduced their share to less than 2.5% within five years. However, after this period expired (in December 2017), Crispian decided to sell most of its stake in Norilsk Nickel - 3.99 out of 6.3%, having received the offer of the Potanin's structure at $234 per share, or $1.47 billion for the whole package. (3.99%). UC Rusal contested the deal in the High Court of London and won: at the end of June, the court declared the deal void because it was not the third-party company that originally made the offer, but the Potanin structure.

Even before the decision of the court, Interros managed to buy 2.1% of Norilsk Nickel from Abramovich for $770 million (Deripaska was going to buy another 1.9% in case of loss), but this deal had to be terminated. After that, Crispian could sell its stake in the company on the exchange or to a third party (although Potanin and Deripaska retain the right of first refusal). Crispian’s right to sell Norilsk Nickel’s shares on the market was previously reported by a source of Kommersant, noting that “there is lack of investors willing to pay such a bonus.”

While Abramovich and partners have decided not to do this, the interlocutors told RBC.

At the close of trading on the London Stock Exchange on October 16, Norilsk Nickel's receipts were worth $17.25 per share, and the package was 3.99% - $1.09 billion. A source close to one of the shareholders of Norilsk Nickel said that Abramovich and partners were interested in the package sold only for $22–23 per share, or $1.39–1.45 billion for such a package, that is, 27–33% higher than the current price. The company's receipts reached a maximum level of $21 per share only in February 2018, when it became known about Potanin’s intention to buy out Abramovich’s stake.

If Abramovich and partners withdrew Norilsk Nickel board, the former head of the presidential administration, Valentin Yumashev, would be the new guarantor of compliance with the settlement agreement between Potanin and Deripaska, Bloomberg wrote. “When they (Abramovich, Deripaska, and Potanin. - RBC) have difficulties, I will try to help them [to resolve the conflict],” said Yumashev in February 2018 to RBC. “I have authority. This is not the first and, apparently, not the last time when they turn to me [with similar requests],” he added. According to Forbes, it was Yumashev who helped to resolve the conflict in Norilsk Nickel in 2012 and suggested Abramovich as an arbitrator.

Representatives of Millhouse of Abramovich and Invest AG of Abramov and Frolov declined to comment.

Sanctions are no matter

Abramovich owned 50% of Crispian (another 50% at Invest AG of Alexander Abramov and Alexander Frolov), which owns 6.3% of Norilsk Nickel. But in August, he sold 0.05% of Crispian to his partner David Davidovich, reducing his stake to 49.95%, the Kommersant newspaper wrote. This was done in order to protect the investment from possible sanctions against Abramovich (according to American law, if a businessman is sanctioned, the sanctions regard all companies in which he owns 50% or more), the publication reported.

Consideration of the new US sanctions package for Russia is scheduled for November, after the congressional elections, RBC wrote. New sanctions may be approved at the end of 2018 or the beginning of 2019.

Potanin does things on his own

Until recently, the main contender for Abramovich’s package in Norilsk Nickel was Vladimir Potanin, who planned to increase his stake in the company. But Interros has not yet decided whether to challenge the London court’s verdict in order to buy out part of the Crispian package, a representative of the Potanin holding told RBC: now lawyers are studying the reasoning part of the verdict.

Even if Interros appeals, it is unlikely the application will change the decision of the London court, said Maxim Khudalov, director of the ACRA corporate rating group. But no one bothers Potanin to gradually increase the share in Norilsk Nickel. At a hearing in London’s High Court in May, Potanin said that he bought a 1.5–1.6% stake in Norilsk Nickel on the free market in the spring of 2018.

Tags: Oligarchs
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