Oleg Deripaska will play with Vladimir Potanin in "Russian roulette"

Oleg Deripaska is ready to launch the "Russian roulette" - buying out Vladimir Potanin's stake in Norilsk Nickel or selling it at a higher price.
Origin source
Oleg Deripaska is ready to launch the shoot-out mechanism in a dispute with another shareholder of MMC Norilsk Nickel Vladimir Potanin. This is reported by Interfax with reference to sources close to one of the shareholders of UC Rusal (the main owner is Oleg Deripaska). According to their data, UC Rusal is ready to buy out Vladimir Potanin's stake in Norilsk Nickel (30.3%) in the range of $ 25-32 for ADR ($ 10.8-13.9 billion) or sell its stake (27.8%) to the company of the estimate above $ 32 for ADR (more than $ 14.1 billion).

UC Rusal can really launch "Russian roulette" and offer Interros to sell its shares to Norilsk Nickel, RBC said a source close to the board of directors of the aluminum company, and UC Rusal, in the case of the acquisition of Potanin's stake, will have to put an offer to minority shareholders, as its package will exceed thirty%. Representatives of UC Rusal and Interros commented.

"Russian Roulette" will be launched if the High Court of London takes the side of Deripaska and decides that the sale by Crispian of Roman Abramovich of shares of Norilsk Nickel to Vladimir Potanin violates the shareholder agreement. A representative of the company Millhouse, which manages Abramovich's assets, declined to comment.

After the truce

The mechanism of "Russian roulette" was stipulated in the agreements of Deripaska and Potanin more than five years ago. From 2008 to 2012, between the businessmen, the shareholder conflict continued, caused, in part, by different views on the further development of MMC Norilsk Nickel and the company's dividend policy. In 2012, it was resolved thanks to the mediation of Roman Abramovich, who bought a small package from Deripaska and Potanin and became a kind of arbitration judge in disputed issues. After that, the businessmen entered into an agreement for five years (until December 2017), which provided for restrictions on the purchase and sale of shares of Norilsk Nickel.

According to their agreements on "Russian roulette", one of the shareholders - Potanin or Deripaska - could offer another to buy out his share at a weighted average price for half a year with a 20% premium. Another could either accept an offer, or buy the partner's share for the same price, or call a higher price for his package. The roulette initiator in return can either buy the partner package at a new price, or present its package to the buy-out. Refusal of the "Russian roulette" can be interpreted as a violation of the shareholder agreement, and the package of the "offender" is redeemed by the second party at a price of $ 1 per share (ADR ten shares).

Relations between Deripaska and Potanin again worsened in early 2018, when the structure of Crispian Roman Abramovich and Alexander Abramov decided to sell 4% of Norilsk Nickel and sent proposals to Interros and UC Rusal. Under the shareholders' agreement, Crispian should offer both major shareholders to buy out the stake in proportion to their shares in the company. Interros offered $ 1.48 billion for the entire package. Accepted the proposal and UC Rusal, but the aluminum company felt that any sale of the share of Crispian in Norilsk Nickel will not correspond to the share agreement (what is the contradiction, UC Rusal does not specify). Now UC Rusal is trying to challenge the transaction through the High Court of London - the proceedings there should begin after March 5.

According to Kirill Chuiko, head of the analytical department of BCS, Deripaska's statements about "Russian roulette" (albeit unofficial ones) are protective. "This" Russian roulette "is extremely unlikely event, they simply will not be allowed to make such a deal, which will create huge stress for the Russian banking system," the expert notes, explaining that both UC Rusal and Interros will have to borrow money from banks . Even if UC Rusal structured asset ownership so that it can circumvent the mandatory offer to minority shareholders, it is a question of too large a sum, says Chuiko. He suggests that Deripaska's goal is simply to cancel the deal with Crispian Abramovich, because he does not want to pay $ 700 million for keeping parity in Norilsk Nickel (with a proportional sale of the share of Crispian).

The net debt of UC Rusal as of September 30 was $ 7.6 m. The net debt of En + Deripaska's group, uniting its aluminum and energy business, was $ 13.1 billion at the end of September. Interros shares are not traded on the stock exchange, the group does not disclose its financial performance.

The last case

In November 2017, Potanin in an interview with Bloomberg talked about negotiations with Deripaska and Abramovich to extend the agreement for another five years. Speaking about the possibility of launching the "Russian roulette", Potanin noted that shareholders can resort to this method only as a last resort - if negotiations reach a deadlock, or one of the shareholders will have to immediately sell the asset. "This is a possible way out of an impossible situation. I think that other shareholders also see this tool as the last option, "Potanin said.

Director of the corporate ratings group ACRA Maxim Khudalov believes that talking about the readiness for "Russian roulette" is part of the tactics of intimidating the opponent. "Such money can hardly be borrowed from banks now. Deripaska could attract Chinese partners (the structure of the Chinese CEFC bought shares of En + Deripaska for $ 500 million), but with them the negotiations are long and hard, "the expert notes. In his opinion, the purpose of the information attack is to reduce the quotes of Norilsk Nickel, as well as in the past corporate wars of shareholders.

If UC Rusal and Interros really take advantage of the "Russian roulette", this will be one of the rare and iconic cases in Russian practice, says Alexander Zakharov, partner of Paragon Advice Group. And given the popularity of the participants in the dispute, this will be a textbook example of the use of a shareholder agreement, he adds.

One of the first "Russian roulette" was launched by Renova Viktor Vekselberg, who in April 2004 offered controlling shareholders of VSMPO-Avisma Vladislav Tetyukhin and Vyacheslav Bresht to buy out 13.4% of the company for $ 148 million, reminds partner Saveliev, Batanov & Partners Sergey Saveliev. Renova was sure that they would not find money for this (under the terms of the agreement, it was impossible to pledge shares) and would be forced to sell their shares to it. But the company has lost: Tetyukhin and Bresht have found money, and "Renova" had to sell its share.