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. Last Updated: 07/27/2016

RusAl Affiliate Buys NkAZ Stake for $6M

An affiliate company of Russian Aluminum, or RusAl, on Friday won a tender for the federal government's 14 percent stake in the Novokuznetsk Aluminum Plant, or NkAZ, whose bankruptcy last year lies at the root of a $3 billion racketeering suit against RusAl.

RusAl would not confirm its connection to the purchase, but news agencies cited sources in the company and officials from the Federal Property Fund, the official seller, as saying the sale was made to one of its affiliates.

The stake in NkAZ, the nation's No. 5 smelter, went for a mere $6.02 million — just $20,000 more than the minimum bid — and had just two bidders, news agencies reported. The fund tried to sell the stake last year but found no buyers.

"The price seems very low for what could be the country's third-largest aluminum smelter," said Mikhail Seleznyov, metals analyst at United Financial Group. NkAZ produced 280,000 tons of aluminum last year.

Seleznyov said the acquisition moves RusAl, the nation's top aluminum producer and No. 2 in the world, one step closer to formalizing its control of the plant. "NkAZ was already under RusAl's control. It has just become more legally formulated," he said.

It is not the first time NkAZ shares have been sold on the cheap. According to the racketeering suit, amended in New York earlier this month, the bankruptcy proceedings against NkAZ were "rigged" by Mikhail Chernoi, a founder of the scandal-ridden metals company Transworld Group, RusAl chief Oleg Deripaska, Unified Energy Systems head Anatoly Chubais and others. The plant was then placed under external management with ties to Deripaska's Siberian Aluminum, a forerunner of RusAl.

Mikhail Zhivilo, head of MIKOM, a plaintiff in the racketeering case, sold MIKOM's 66 percent stake in NkAZ at a distressed price last September to Grigory Luchansky, who acted on behalf of Chernoi and Deripaska. Luchansky has been negotiating to sell the stake to RusAl, according to media reports. Zhivilo fled the country in 2000 after losing control of his metals holdings and being accused of plotting an assassination attempt against the regional governor.

RusAl has already received the Anti-Monopoly Ministry's blessing to acquire up to 66 percent of NkAZ.