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. Last Updated: 07/27/2016

State Sells Off Last Stake in Sayansk




The government has sold off its last, 8.85 percent stake in Sayansk Aluminum Works, Russia's fourth largest aluminum producer, for $5.9 million to eight bidders, the Federal Property Fund said Monday.


The fund, which organizes state privatizations, refused to reveal the names of the winners of the tender that was held in early May, although it said the group included two private investors.


Analysts said all of the winners were probably affiliated to the Sibirsky Aluminum consortium, which prior to the sale owned 58 percent of the company.


Consortium affiliate Aluminprodukt owns another 15 percent of the plant, said Alexander Andreyev, metals analyst at Brunswick Warburg.


The government's 1,062,348 shares sold on the auction block for a starting price of 140 rubles each. Andreyev and Tatiana Nikolskaya, metals analyst at Nikoil investment banking group, said the winners had apparently agreed in advance on the amount of their bids.


Under the auction rules, a participant could either bid by submitting the upper limit of his price or by placing a bid for a certain number of shares, the price for which would be determined by the property fund.


All of Sayansk's winners bid by stating the upper limit of his price, and all of them chose the starting price as the top price.


Nevertheless, property fund officials said it was unlikely that the winning bids had been an orchestrated effort by the Sibirsky Aluminum consortium.


Yelena Okrut, the fund official who organized the tender, said anyone in Russia's 25 regions where fund offices are located could have made a bid.


"How could all the potential bidders agree on the price?" Okrut said.


Nikolskaya retorted: "They definitely agreed the price between themselves and with the fund. No one else is interested in those shares because they don't give any control. It is insider interest only."


Analysts said it was hard to say if 140 rubles each was a fair price for the shares since they have not traded on the secondary market since early this year.


"The market does not exist," Nikolskaya said. "It is hard to say how much they [shares] should cost now."


The last time shares were sold on the market, they went for about $7 each.


Sayansk Aluminum Works, with a 1998 output of 330,000 tons of aluminum, is considered by analysts to be one of the most modern aluminum plants with the most cost-effective production lines in Russia.


The plant is a member "of the only functioning vertically integrated complex of the aluminum industry, Sibirsky Aluminii consortium," Andreyev said. "The consortium actually originated from this works and its head, Oleg Deripaska, heads both."


The consortium also owns the Sameko plant in Samara, which manufactures rolled aluminum, the soda can-producing Rostar factory and Sayanal, which makes foil. The group, which recently obtained some shares in trust in the Samara Aviastar aviation company, holds stakes in alumina factories Pavlodar in Kazakhstan and Nikolayevsk in Ukraine, from which it gets most of its raw material.


Sayansk, with 6,641 employees, owed creditors 406 million rubles ($25.4 million) as of October 1998. It did not have any debts with the government.


The biggest aluminum factory is the Bratsky Aluminum plant, controlled by the Trans-World Group of Britain, which produced 844,000 tons in 1998, Andreyev said.