Power Grab at Norilsk Nickel Likely if Deripaska Goes Broke, Global Insight Reports

MOSCOW, Oct 23, 2008 /PRNewswire via COMTEX/ -- Russia's richest man is having money troubles, and the country's largest nickel producer could change hands as a result. Forecasting firm Global Insight reports that Oleg Deripaska is running out of time and money to pay back the USD 4.5 billion he borrowed from a group of foreign financial institutions in April 2008 to purchase a 25% share in Norilsk Nickel. Deripaska used the shares in the nickel producer as collateral, but their value has since plummeted to the point that they no longer cover the money he owes; Deripaska now needs USD 1.8 billion to refinance the loan, according to the report. Deripaska's creditors have granted him an extension until the end of the month, but it is unlikely they will be so generous again. The oligarch has already sold his assets in Canadian automotive parts maker Magna and German construction company Hochtief, but these deals still have not produced enough funds to pay off the debt, the report states. Having exhausted every other possibility, Deripaska is now seeking help from the state. "Deripaska has turned to Vnesheconombank (VEB), a state corporation used by the government to manage state debts and pension funds and that receives funds directly from the state budget," Global Insight reports. His request: a USD 50 billion aid package for Russian companies seeking to restructure foreign debt. The VEB board, headed by Prime Minister Vladimir Putin, is "considering Deripaska's application, but this will take 18 days -- and Deripaska needs the money now," the firm reports. If the bureaucratic process cannot be sped up, Deripaska will have to sell his stake in Norilsk. In that event, there are several potential bidders, including VEB itself and nearly all of Russia's prominent oligarchs. VEB would like to keep the company out of foreign hands. Norilsk Nickel founder and primary shareholder Vladimir Potanin is a likely bidder, seeing as he and Deripaska wrestled for control of the company in the past. Norilsk co-founder Mikhail Prokhorov, who created the mess by offering Deripaska the stake in the first place, is also interested. Alisher Usmanov, owner of Matalloinvest holding, has been pursuing ownership of Norilsk for years, with a view to create the world's largest steelmaker. In light of Deripaska's rocky relationship with the other Norilsk shareholders, Global Insight concludes that his departure may actually benefit the company: "For minority shareholders, the change of owner may actually bring more certainty, as the boardroom struggles between Potanin and Deripaska in July and August have undermined the company. Whoever replaces Deripaska should ideally have a long-term vision for the company's growth, preferably in agreement with Potanin."