Chairman quits in battle for Rusal
Rusal chairman Viktor Vekselberg has quit the aluminium giant, after locking horns with the Hong Kong-listed firm's biggest shareholder and chief executive, Russian tycoon Oleg Deripaska.
Vekselberg, Rusal's second-largest shareholder with 24.42 per cent, said in his resignation letter that the company faced a 'deep crisis, as a result of which Rusal has deteriorated from an international aluminium leader into a company overburdened with debt and entangled in numerous lawsuits and social conflicts'.
He slammed management, saying he disagreed with decisions in Rusal's strategic development, modernisation of production and human resources policies, 'some of which were adopted by management without board approval and in breach of shareholder agreements'.
But Rusal hinted that the board was already thinking of letting him go, saying his decision to quit had 'pre-empted the anticipated consideration of this matter by the board'.
It said Vekselberg failed to do his job as chairman, had not attended board meetings since February 2011, was absent from the annual meeting in Hong Kong last year and all investor meetings in the past year. Rusal said it would appoint an independent director as its new chairman.
A report by Russian brokerage Finam said Rusal's statement 'looks like an attempt to present things in a better light than they are in reality, which is unsuccessful'. Finam described Vekselberg's resignation as a 'hard confrontation which is obviously bad for the company and the share price'.
'It was pretty clear Rusal conducts a policy which doesn't always target pure value creation. Considering the poor aluminium market and corporate issues, we do not expect Rusal to outperform the market in the near term,' Finam said.
BOC International analyst Robin Tsui said Deripaska and Vekselberg clashed over Norilsk Nickel, Russia's biggest metal producer - Vekselberg wanted Rusal to sell its 25 per cent stake in Norilsk to pay down some of its huge debt, but Deripaska wanted Rusal to increase its Norilsk stake.
In the past year, Deripaska had tried to acquire Norilsk while Norilsk had separately tried to acquire Rusal, Tsui said. He said this battle between Norilsk and Rusal posed a risk to Rusal's share price, and their attempts to buy each other were not in their shareholders' best interests.
Tsui said Rusal owed banks US$11 billion, but that should not be a problem as it has up to 2016 to repay them.
Russian media earlier this month quoted Rusal's third-biggest shareholder, Mikhail Prokhorov, as saying that he and Vekselberg did not agree with Deripaska's policies.
'We are trying to change this, but he has the controlling stake,' Prokhorov was quoted as saying. Deripaska owns 57.78 per cent of Rusal.
Prokhorov, a Russian tycoon who lost to Vladimir Putin in the Russian presidential election earlier this month, owns 17.02 per cent of Rusal.
Deripaska is being sued by Ukraine-born businessman Michael Cherney in London over shares.
Rusal's stock was suspended yesterday.