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Abramovich buys Norilsk stake

Dec - 4 - 2012
Business Tips

Chelsea owner Roman Abramovich has poured millions into the EPL club but they must now balance their books under FFP.

  • Roman Abramovich has agreed to buy a 7.3 per cent stake in Norilsk Nickel
  • The step helps resolve a long-running battle for control between the metal producer’s two biggest investors
  • Abramovich will acquire the stake from Norilsk subsidiaries for an undisclosed amount

(Financial Times) — Roman Abramovich, the Russian billionaire owner of Chelsea football club, has agreed to buy a 7.3 per cent stake in Norilsk Nickel to help resolve a long-running battle for control between the metal producer’s two biggest investors.

Millhouse Capital, the investment company owned by Mr Abramovich, will acquire the stake from Norilsk subsidiaries for an undisclosed amount. It will get three seats on the 13-member board of directors, according to a statement issued by Hong Kong-listed Rusal, which owns 25.13 per cent of Norilsk.

Vladimir Potanin, whose company Interros has a 28 per cent stake, will be the new chief executive officer following repeated calls by Rusal’s largest shareholder Oleg Deripaska to replace Vladimir Strzhalkovsky.


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The Kremlin is believed to have stepped in to help end the four-year dispute between Mr Potanin and Mr Deripaska, which has held back the development of the world’s largest producer of nickel and palladium.

Mr Deripaska and Mr Potanin, who have argued over the business since Rusal bought its stake in 2008 as part of a takeover attempt, met Prime Minister Dmitry Medvedev in late October while Mr Potanin had a meeting with President Vladimir Putin last Friday.

While Mr Potanin gets the chief executive position under the deal, Mr Abramovich is seen as a neutral third party who can reduce the influence of Interros, which Mr Deripaska has blamed for mismanagement of the business. Two of Russia’s wealthiest businessmen have been at odds over Norilsk’s stock buybacks and dividend policy.

“The agreement provides for certain measures ensuring stability of dividends paid by Norilsk Nickel in relation to the years 2012, 2013, and 2014 respectively,” Rusal said without elaborating.

“The reasons for and benefits of entering into the agreement are to improve the existing corporate governance and transparency of the Norilsk Nickel group, to maximise profitability and shareholders’ value and to settle the disagreements of the company and Interros.”

Rusal shares in Hong Kong were little changed on Tuesday morning. The company last year wrote down the value of its Norilsk stake by $ 1.4bn and blamed management for undermining the value of its shares.

Rusal has seen its share of internal strife over the Norilsk investment, a $ 14bn purchase made at the peak of the market and which left behind $ 11bn in net debt.

Viktor Vekselberg, Rusal’s former chairman, quit in March after accusing Mr Deripaska of throwing Rusal into “deep crisis” by turning down Norilsk’s $ 12.8bn offer to buy Rusal’s stake.

Barry Cheung, Rusal’s chairman, said there was “an agreement for a more stable and predictable dividend payout going forward and that’s something that Rusal and other investors want to see”.

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