RUSAL raps Norilsk stake sale to own units as unlawful

Source: Metals Insider MOSCOW, Sept 28 (Reuters) - Russian metals giant Norilsk Nickel said on Sunday three of its subsidiaries had bought around 8.7 percent of its shares but a major shareholder, RUSAL, called the sale unlawful. Norilsk, in a statement, gave no reason. "OJSC Norilsk Kombinat and OJSC Kola MMC deposited with OJSC AKB Rosbank ("Rosbank") up to 8 billion roubles free cash and 12.64 billion roubles, respectively, and OJSC OGK-3 may deposit free cash up to 22 billion roubles with other financial institutions," Norilsk said in a statement. "A decision by Norilsk Nickel to channel cash of its subsidiaries to buy out the metal miner's shares is a flagrant violation of principles of corporate governance and of the rights of minority shareholders," RUSAL said in a statement. RUSAL's criticism threatens to become a new chapter in the tug-of-war over splitting assets between Mikhail Prokhorov and Vladimir Potanin, ranked Russia's number five and six richest men respectively by Forbes magazine. RUSAL, the world's top aluminium producer, hit out at Vladimir Potanin, Norilsk's largest single shareholder, and Norilsk Chief Executive Vladimir Strzhalkovsky, saying they were using loopholes in Russian legislation. "They yet again demonstrated their staunch unwillingness to count the interests of other shareholders and their readiness to commit any violations of corporate governance to keep their full control over the company." "This looks especially cynical, taking into account the fact that Vladimir Potanin heads Russia's national council on corporate governance," RUSAL said. STILL CLOSE TO A DEAL? Billionaires Potanin and Prokhorov announced last week they were close to a final asset split deal involving stakes in metals giant Norilsk Nickel and gold miner Polyus. The two tycoons shared control in Norilsk, the world's top nickel producer and Polyus, Russia's number one gold producer, before announcing their plans to divide assets in January 2007. Prokhorov has since sold his 25 percent plus-two-shares stake in Norilsk to the world's top aluminium producer RUSAL. As of May 26, Potanin owned 29.8 percent in Norilsk. RUSAL said it had sent several weeks ago a letter to Norilsk's Strzhalkovsky, saying it would be "imadmissible" to use the cash of the miner and its units for share buybacks without consulting other shareholders. "But this letter was ignored -- just like many others," RUSAL said. "We categorically disagree with such actions initiated by Vladimir Potanin who, employing flaws of Russia's legislation, rudely flouts the rights of shareholders in the best traditions of the 1990s, steadily undermining Norilsk Nickel's value."