RUSAL's irritation

Vladimir Potanin strengthened control over Norilsk Nickel by 8%

The subsidiaries of Norilsk Nickel announced yesterday that they had become shareholders of the parent company. They invested about 42 billion rubles. temporarily free funds in 8.1% of Norilsk Nickel shares. This is one of the largest transactions in Russian financial history, similar to the buy back mechanism (repurchase of own shares from the market), which many large companies in the country are going to use to support the price of securities. But since its subsidiaries became the buyer of Norilsk Nickel shares, the company said, the securities will not be recognized as “treasury” and therefore will be able to participate in voting at shareholder meetings. In conditions when there is a struggle for influence on management between the main owners of the nickel company - Vladimir Potanin's Interros (about 30%) and Oleg Deripaska's RUSAL (25% plus one share), Mr. Potanin, who actually controls Norilsk Nickel ", received significant support. A statement from RUSAL, issued late yesterday, said that “the decision of MMC Norilsk Nickel to use funds from its subsidiaries to buy back MMC shares is a gross violation of the principles of corporate governance and the rights of minority shareholders.” Representatives of Interros and Norilsk Nickel were unavailable for comment.

Norilsk Nickel announced the repurchase of its own shares a month ago , considering this issue at a meeting of the board of directors, but then it was about 4.17% of shares for 49 billion rubles. “Norilsk Nickel’s acquisition of its own shares is carried out in order to support the company’s securities, the value of which has decreased significantly over the past few months,” said then General Director of MMC Vladimir Strzhalkovsky. “This happened to a large extent under the influence of factors unrelated to the company’s fundamentals.” RUSAL voted against this decision, but the volume of its votes could not change anything. “RUSAL consistently advocates the distribution of funds not used in the investment program among all shareholders in the form of dividends,” the company explained its position. “We believe that paying dividends is the most effective form of using the company’s available funds in the interests of all shareholders, without infringing on the rights of those minority shareholders who do not intend to sell them.”

For RUSAL, an increase in the stake in Norilsk Nickel, which is somehow controlled by Mr. Potanin, is a negative factor. The aluminum company seeks to convene an extraordinary meeting of MMC shareholders, at which to increase the number of members of the board of directors from 9 to 13 and to appoint the maximum number of independent directors who could take into account its interests. But Mr. Potanin does not intend to give up control over Norilsk Nickel, which causes indignation at RUSAL. In its statement yesterday, the company notes: “Using the imperfections of Russian legislation and their uncontrolled power over Norilsk Nickel, Vladimir Potanin, as chairman of the board of directors, and Vladimir Strzhalkovsky, appointed by Potanin as general director of MMC, have once again demonstrated their complete unwillingness to take into account the interests of other shareholders and willingness to commit any violations of corporate governance principles in order to maintain full control over the company. This looks especially cynical if we take into account the fact that Vladimir Potanin is the chairman of the national council for corporate governance in Russia... We categorically disagree with such actions initiated by Vladimir Potanin, who, using the imperfections of Russian legislation, in the best traditions 90 's grossly violates the rights of shareholders, consistently destroying the value of MMC Norilsk Nickel. However, RUSAL, accusing Mr. Potanin, is not the first time appealing to certain “principles of corporate governance”, without explaining what he means. In addition, it is absolutely not clear how the purchase of Norilsk Nickel shares can “destroy the value” of the company.

Meanwhile, it is unclear who sold the 8.1% stake in Norilsk Nickel. One of the stock market analysts suggested that Mikhail Prokhorov could get rid of the securities: in the summer he put out an offer to Mr. Potanin for 16.66% of the shares of the nickel company, which was not accepted. However, the sale of securities by Western investment funds cannot be ruled out.

Ivan GORDEEV