Email This Post - Print This Post Print This Post

By John Helmer in Moscow

Deripaska and Prokhorov holding companies trade claims over Norilsk Nickel deal contract.

Onexim, the Moscow holding unit for Mikhail Prokhorov, has broken its silence on the troubled sale of a 25% stake in Norilsk Nickel — in a manner of speaking.

Terms for the deal between Prokhorov and Oleg Deripaska, controlling shareholder of United Company Rusal, were first negotiated last August and September; the deal was announced in November. If fully consummated, it represents the largest corporate takeover in Russian history, and the most expensive hostile bid on the Russian record.

Mineweb reported yesterday on evidence of the apparent breakdown in the six-month old bid by Deripaska to take control of Norilsk Nickel from Vladimir Potanin and the Interros group, formerly Prokhorov’s partner:

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=49850&sn=Detail

Sources inside Onexim say that Prokhorov and his principal advisor, Onexim chief executive Dmitry Razumov, have decided not to speak about the status of their contract with Oleg Deripaska’s Rusal, whose deadline for completion is March 31. Prokhorov’s last media remarks were quoted on the weekend, in a London Sunday paper; but he was silent on his part in any Norilsk Nickel takeover bid by Rusal.

A bank source close to the deal has told Mineweb that next week’s deadline is viewed by the Prokhorov camp as a contractual obligation for Deripaska and Rusal. The Deripaska camp, on the other hand, are claiming they want to close the deal next week, but concede that’s more their desire, than their legal duty.

The silences and the words are significant, because there is a $300 million break-fee penalty payable by Prokhorov if he signals he is pulling out. If Deripaska cannot meet the full terms, either by falling short of the $4.438 billion cash down payment, or by missing the deadline, then Prokhorov walks away with his Norilsk Nickel stake intact — worth at today’s share price for Norilsk Nickel 3%, or $750 million richer on paper.

A source close to Onexim, who said she was authorized to respond to Mineweb’s questions, said: “The transaction with Rusal will be closed by the end of April….The parties finish work on the technical questions necessary for performance of the conditions for closing the transaction. The key parameters of the transaction remain without change.”

Credit Suisse announced publicly that an agreement between Rusal and a syndicate of banks for the cash part of Deripaska’s deal with Prokhorov was signed on March 10. Drawdown of the funds was announced as following the same week. Mineweb has now confirmed that there has been no disbursement of the bank money.

“Late arising technical reasons” are described by a source close to the 10-bank financing syndicate as the cause of the delay. It is also apparent from the source that the syndicate was taken by surprise when Norilsk Nickel announced that it is contemplating the takeover of the iron-ore and steel assets of the Metalloinvest group, owned by Alisher Usmanov, Vasily Anisimov, and Andrei Skoch.

The bankers also concede they are in the dark about whether there is Kremlin support for Deripaska’s plan; and what Deripaska’s current political standing is during the transition between outgoing President Vladimir Putin, and incoming President Dmitri Medvedev. The latter will be inaugurated on May 5.

Leave a Reply