Russia's UC RUSAL demands Norilsk board re-vote

MOSCOW, Aug 14 (Reuters) - United Company RUSAL, the world's largest aluminium producer, on Thursday demanded the re-election of the board of Russian miner Norilsk Nickel, saying it believed it to be controlled by a rival shareholder. The demand is the latest twist in the disagreement between UC RUSAL, holder of a 25 percent-plus-two-shares stake in Norilsk, and Interros, the investment vehicle of tycoon Vladimir Potanin, which holds around 30 percent of the Arctic miner. "UC RUSAL is completing consultations with Norilsk Nickel minority shareholders held over the last two months to discuss the current situation at the company and the creation of a 13-member board," UC RUSAL said in a statement. "As a result of these meetings, UC RUSAL intends to file an application in early September to call for an extraordinary meeting of Norilsk Nickel shareholders to elect truly independent directors to a new enlarged board." Norilsk's current board is chaired by Potanin and comprises nine directors, three of whom represent UC RUSAL. Interros also has three official representatives, although UC RUSAL has argued that at least one of the three remaining independents is also affiliated to Potanin's company. UC RUSAL has also asked minority shareholders to propose candidates for independent directors and an independent chairman for the board to ensure that the new board is not controlled by either of the two largest shareholders, UC RUSAL said. "UC RUSAL believes that the current board, fully controlled by Interros, is incapable of reversing a slide in Norilsk Nickel's market value," it said. Interros declined to comment. UC RUSAL has repeatedly criticised Interros for management inefficiency and has challenged the election of Potanin-backed Norilsk Chief Executive Vladimir Strzhalkovsky. UC RUSAL said on Thursday it would propose that the new board create a committee to look for professional managers for the positions of chief executive and other top executives. It would also propose that the new board develop an operational improvement programme, an environmental programme and review the capital expenditure programme. UC RUSAL also defended payment of all accumulated cash not used in investment programmes in the form of an interim dividend and adoption of a new dividend policy, taking into account Norilsk Nickel's capital expenditure and liquidity requirements. Norilsk has pledged to pay at least 25 percent of its net profit calculated to International Financial Reporting Standards in dividends. Norilsk has lost over a third of its market capitalisation since May, partly due to a sharp decline in nickel prices. The company is currently valued at about $35.4 billion. Norilsk's shares were up 5.96 percent at 4,888 roubles ($201.2) by 1335 GMT, outperforming a 2.71 percent rise on the MICEX bourse's mining and metals exchange . (Editing by Paul Bolding)