Rusal shares fall on fears over Norilsk stake

Rusal shares slumped to a one-month low yesterday as investors bet that the company is set to lose a key battle in the feud between the aluminium giant's chairman, Oleg Deripaska, and rival oligarch Vladimir Potanin for control of Norilsk Nickel.

Shareholders of the nickel miner met yesterday in Moscow to vote on a Rusal resolution to remove Norilsk's board of directors, led by chairman Vasily Titov, an executive at Russian bank VTB.

While a Norilsk spokeswoman said the results were not expected until next week, Dimitry Smolin, an analyst with Russian bank Uralsib, said: 'We think Potanin, together with the management, will retain control.'

Rusal shares slumped 4.5 per cent to HK$11.82 ahead of the extraordinary general meeting, which began at 3pm Moscow time.

This week, Potanin told Russian media he raised his stake in the nickel miner to 30 per cent from 25 per cent. That took his ownership of Norilsk above Rusal's 25 per cent.

Potanin has consistently attempted to buy Rusal out of Norilsk since Deripaska first invested in the nickel miner in 2008, but without success.

In February, Norilsk offered to buy 20 per cent of the company back from Rusal for US$12.8 billion, and was also turned down.

Rusal's stake in Norilsk is now worth half of its HK$180 billion market capitalisation, and shareholders have been banking on Deripaska (pictured) securing a very high sale price. But that would rely on Deripaska having strong influence on Norilsk's board. He had some serious blows recently that suggest he is losing control.

Last June, four directors sympathetic to Potanin were appointed to Norilsk's board, compared with three nominated by Rusal.

Meanwhile, Norilsk said it planned to sell a further 8 per to international oil trader Trafigura, which analysts widely believe supported Potanin. A Trafigura spokesman could not be reached.

Rusal launched court cases in Russia, the US, London and the Caribbean in a bid to strengthen its hand at Norilsk, but unsuccessfully.

Last month, a court in St Kitts and Nevis lifted an injunction Rusal obtained to prevent subsidiaries of Norilsk, which hold 15 per cent of the firm's shares, voting their stake.

Norilsk has not revealed the terms of the Trafigura sale, or even whether the deal has been completed.

On March 1, the London High Court rejected Rusal's bid to force Norilsk's law firm, Debevoise and Plimpton, to hand over documents related to the Trafigura purchases.

But a US court granted Rusal a subpoena compelling Trafigura to produce documents. A Rusal spokesman declined to comment.