February 8, 2011 3:04 am

UC Rusal wins ruling against Norilsk deals

Oleg Deripaska’s UC Rusal has won a court injunction suspending a $3.5bn share buy-back by Norilsk Nickel, escalating the tycoon’s battle for control of the world’s biggest nickel miner.

Rusal said the injunction issued by a Caribbean court on the island of St Christopher and Nevis also blocked the sale of an 8 per cent Treasury stake held by management to Trafigura, the Dutch trader.

Mr Deripaska, whose UC Rusal holds a 25 per cent stake in Norilsk, has been racing to block both deals before an extraordinary shareholders meeting set for March 11 at which he will go head to head with Vladimir Potanin, the rival metals tycoon, over the composition of the Norilsk board.

The share buy-back for more than 7 per cent of Norilsk’s shares would increase the share of votes held in the company by an alignment of management and Mr Potanin to more than 40 per cent.

But it was not clear on Monday how great an impact the injunction – in force until hearings set for March 2 – would have. The injunction blocks two St Christopher and Nevis registered vehicles, Corbiere and Raleigh Investments, from taking “any corporate action whatsoever in relation to the buy-back and public tender offer or the Trafigura transaction”, according to a copy of the order.

But Norilsk declined to comment on Monday on whether these two vehicles still held the 8 per cent stake to be sold to Trafigura for an undisclosed sum. The companies were officially recorded as holding the stake last year, but it was not clear whether the stake had already been transferred.

People familiar with the situation say Trafigura is still negotiating the final details of the sale with Norilsk, which was announced in December, and only expects to complete the deal by the end of March.

Norilsk also declined to say what percentage of the share buy-back had already been paid for and transacted and was therefore not affected by the freeze.

Rusal has criticised the buy-back as corporate blackmail, while it is challenging the company over the stake sale to Trafigura for failing to disclose details of the deal, including the sale price, which was agreed without board approval. Analysts believe the stake should be worth $3.5bn and that Trafigura will have agreed to vote the stake in line with management as part of the deal.

Norilsk said it would contest the court ruling and lashed out at the latest attack by Rusal as being aimed at “discrediting the company and undermining its value and the work of management”. It said it had started talks with minority shareholders affected by the freeze to discuss potential legal action against Rusal.

Additional reporting by Javier Blas in London

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