Norilsk May Spin Off Just OGK-3

Itar-TassNorilsk's management committee is recommending that all but the six power stations operated by OGK-3 be sold off.
The management committee of miner Norilsk Nickel has decided to recommend that its board spin off just one power generator, OGK-3, and sell its remaining electricity assets, Norilsk said Monday.

The board is expected to discuss the issue at a meeting on Wednesday, a Norilsk statement said.

Norilsk has spent billions of dollars on power assets in recent years, banking on the further liberalization of the electricity market, with the biggest purchase being a $4.6 billion acquisition of OGK-3.

OGK-3 owns six power stations across the country with a combined generating capacity of 8.5 gigawatts.

But the Norilsk strategy ran into trouble after owners Vladimir Potanin and Mikhail Prokhorov failed to find a compromise over how to split their assets in a long corporate divorce.

Prokhorov last year blocked the spinoff of all the company's energy assets into a separate company. But after he had sold his stake in Norilsk of 25 percent plus two shares to the world's top aluminum producer, United Company RusAl, the spinoff issue was raised again.

In May, both Potanin and United Company RusAl backed the spinoff with the intention of creating more value for Norilsk shareholders.

The management committee has also recommended the board consider separately the fate of a regional power generator, TGK-14, which provides energy to Norilsk copper projects located close to Lake Baikal.

In 2007, Norilsk owned $7 billion worth of energy assets, including 65.15 percent of OGK-3, 27.69 percent of TGK-14, 7.37 percent of TGK-1 and under 2 percent of OGK-5 and TGK-5.

It also owned 3.52 percent of national power giant Unified Energy System, which was converted into shares of companies formed following its breakup.

It has since sold a stake in OGK-5 for $106 million.