Potanin to Block Issue at Polyus

Members of the board of Polyus Gold representing co-owner Vladimir Potanin said Monday that they would boycott the board meeting this week in order to block a new share issue proposal.

Potanin and his fellow billionaire owner Mikhail Prokhorov are in a protracted process of dividing their assets, including Polyus and its former parent company, the metals giant Norilsk Nickel.

Prokhorov said last week that Polyus, sitting on the world's third-largest gold reserves, had no means to develop its deposits and needed to raise cash through an additional share issue, which he wanted to discuss at a meeting Tuesday.

"We are not going to participate [in the meeting]," Sergei Batekhin, Polyus' board member representing the interests of Potanin, said Monday. "We are ready to discuss such proposals in a comfortable manner, but not in a rush," said Batekhin, who is also a deputy head of Potanin's holding company Interros.

He added that the additional share issue had not previously been on the agenda of the Polyus board meeting.

Batekhin said Prokhorov's latest proposal did not match previous offers made by Prokhorov's investment vehicle, Onexim Group, which Interros understood as an attempt to carve out Polyus' prospecting subsidiary from the parent company. "I do not like using the word 'manipulation,' but what they are proposing to us now looks very much like manipulation," Batekhin said.