By John Helmer, Moscow
Oleg Deripaska appears to have lost a nine-year long battle to take control of Vanino, an eastern seabord port on which Deripaska depends for imports of alumina to feed his aluminium smelters in Siberia, and to load finished aluminium for export to buyers in the US and East Asia.
The man who appears to have bested him is Vladimir Lisin, the steelmaker . The tussle for the port, on the Tatar Strait and the Sea of Okhotsk, won’t be over until Lisin wins the bidding for the state control shareholding – if he wins. But the flags now flying from the Vanino flagpole signal that Lisin has once again won over Deputy Prime Minister Igor Sechin, the key decision-maker in the government for both the resources sector and for the maritime sector .
If Lisin can oust Deripaska in Sechin’s affections – whether to serve as a warehouser of assets until a more lucrative price can be taken from the market, or to guard Sechin’s interests against the ambitions of oligarchs he trusts less — the consequences for Deripaska’s control of other assets, including government favours for electricity, taxation, and transportation, could be grave.
According to a ruling decided on January 23, but not published until January 30, the Federal Antimonopoly Service (FAS) in Moscow has approved an application by the ports holding company owned by Lisin – United Cargo Logistics (UCL) Holding, registered in Amsterdam – to acquire 100% of the shares of the Vanino port company. At this point, the federal government owns 55% of the port company capital, 73% of the share issue; this is administered by the Federal Property Management Agency. The remainder of the shares is held by companies in Deripaska’s group.
Lisin, whose wealth comes principally from the Novolipetsk steelmaking group (NLMK), avoided the leveraging which in 2008 led Deripaska to the edge of insolvency with more than $20 billion in debts. As he built up NLMK, Lisin acquired river-shipping fleets and port terminals on Russia’s western seabord in order to protect the supply chain to his steel mills, and his access to export markets, principally in Europe. These maritime assets, trimmed down to fleets and ports by recent disposals of shipyards, are being reorganized for an initial public offering (IPO) whose date has yet to be set.
Vanino is a relatively small port by Russian standards. In 2010 its cargo turnover was 6 million tonnes. In the first nine months of 2011, turnover fell 7% to 4.3 million tonnes; export tonnage was 1.9 million tonnes, down 9% compared to the same period of 2010.
The official auction of the state stake in Vanino port has yet to be scheduled and a result announced. An auction failed last year because the winning bid for $396 million by an unknown company called Seltekhstroy failed to materialize with the money. The Deripaska group’s bid was reported to have been half as much at $194 million.
It is suspected that the Vanino management, led by Alfir Bogudinov, was behind the mystery bidder with the aim of stalling Deripaska and preventing Rusal taking control.
Last week’s authorization by FAS of the possibility of a winning bid by Lisin is a signal that another rival bid by Deripaska will not be approved. Also, the rejection by the federal government a few days ago of an attempt by Deripaska to oust the port company management opposed to his takeover is a further sign that Deripaska has been beaten.
His spokesman, Sergei Babichenko, declined to return calls or respond to questions.
In 2003, when the Russian government first suggested it wanted to privatize its control stake, Vanino port sources reported rivalry between Rusal and its domestic competitor, Victor Vekselberg’s Siberian Ural Aluminium company (SUAL) for use of the port to load aluminium exports. At the time, the port was shipping about more than half a million tonnes per annum of aluminium for Rusal; and about 200,000 tonnes for SUAL. The port had 1.2 million tonnes of capacity for export shipments, but the aluminium producers had left this unused while they loaded ships at St. Petersburg. When Rusal decided to reorient its trade flows from St. Petersburg to Vanino, and from Europe to Asia and North America, it clamped tight secrecy over details of the trade.
Far Eastern Shipping Company (Fesco), owned by Sergei Generalov, was one of the shipping companies contracted by Rusal for shipping its metal across the Pacific. But in 2006 Generalov had fallen out with Deripaska, and proposed to buy the state stake in the port and take control for Fesco. Lobbying by the two men of government officials led to an impasse, and the Moscow authorities repeatedly put off the privatization auction.
After the auction result of last year was nullified, Deripaska then tried to oust Bogudinov as chief executive of the port company. His candidate for the job was Dmitry Lisin. Vladimir Lisin has a son, Dmitry, born in 1983; but the UCL spokesman, Dmitry Baukov, emphasized today “they are just namesakes. And by the way, [the unrelated] Dmitry Lisin had once worked in our group in the post of Deputy CEO of the Taganrog port. But, nevertheless, he doesn’t have related communications with our shareholder.”
Last month, Zakir Vagapov, spokesman for Vanino, told Fairplay many companies are interested in taking stakes in the port, and together “they are ready to pay much more than [the Deripaska holding company]. So his action against the port management has been aimed at getting the purchase of the asset more cheaply.” Vagapov and his boss Bogudinov expressed this confidence after they had successfully lobbied Prime Minister Vladimir Putin and the Ministry of Economic Development to overrule a recommendation from the Federal Property Management Agency supporting Deripaska’s attempted shakeup.
Today Bogudinov and his spokesman confirm the FAS ruling in favour of UCL. But they won’t say if they support Vladimir Lisin’s takeover. “The management doesn’t comment on this situation,” Vagapov said, “because the port is a state company, so they just receive the decisions which have been made [in Moscow].” In a written statement by the port company to follow, the hope is expressed that “after the sale of shares in OAO Commercial Sea Port Vanino, the purchaser will implement his obligations, including the issues of further development of the port, and ensure the stable operation of the enterprise.”
Is Lisin acting as a white knight for the port to ensure that Deripaska is driven off? Baukov for UCL says only that his group remains interested in buying Vanino, but will “make the final decision to acquire only when there will be details of the second auction (the starting price and the date).”
Alexei Bezborodov, an expert on the maritime sector in Moscow and chief analyst for Infranews.ru, said he is sceptical about the valuation and pricing. “The assets themselves are not worth it. A lot of money is needed to invest in the port. So the terms ‘contest’ and moreover ‘white knight’ are not suitable for this situation at all. It’s just a little war on Deripaska.”
Taras Sobko of the Ministry of Economic Development and Arina Lazareva of Federal Property Management Agency said they would not respond to questions unless they were put in fax form. When they were, they didn’t reply.