Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Prokhorov Drops Norilsk Demands

Itar-TassKlishas, left, and Norilsk general director Oleg Morozov at a news conference after Friday's shareholder meeting.
Norilsk Nickel's board of directors remained intact Friday after Mikhail Prokhorov, who claims to be the single largest shareholder, dropped his earlier demands for its re-election amid reports that he is ready to sell his 25 percent stake.

Shareholders voted overwhelmingly in favor of keeping the current board, including Prokhorov's investment vehicle Onexim Group, Norilsk chairman Andrei Klishas told reporters after an extraordinary general meeting Friday. Representatives of Interros, controlled by Norilsk's other major shareholder, Vladimir Potanin, abstained from voting, Klishas said.

The vote marked a surprise change of heart by Onexim, which called the shareholders meeting last month, seeking board-level influence months after Prokhorov stepped down as CEO as several big decisions loom for the nickel miner, including the spin-off of its power assets.

Since the beginning of this year, business partners Prokhorov and Potanin have been engaged in a drawn-out dialogue on the separation of their assets, which include stakes in Norilsk and Polyus Gold. Prokhorov had been expected to sell his stake in Norilsk to Potanin, who is understood to hold a 22 percent stake in the miner directly, while both men own a further 8 percent jointly through their fund KM-Invest.

Onexim spokesman Alexei Rybinkin said the group would demand that KM-Invest sell its 8 percent stake in Norilsk. Under a deal struck earlier this month, the two parties had the right to call for the sale of the stake if they failed to agree on which way to vote during Friday's meeting.

In recent weeks, Prokhorov has lifted his stake to a 25 percent blocking interest and is thought to be seeking to sell it to a strategic investor, which may not be Potanin.

"We directly own 25 percent and are ready for the sale of this stake," Onexim general director Dmitry Razumov said Thursday, Kommersant reported.

The newspaper said Prokhorov had held talks with RusAl majority shareholder Oleg Deripaska, Alisher Usmanov of Metalloinvest and Yevgeny Shvidler, a longtime ally of Roman Abramovich, without saying where it got the information.

Onexim's Rybinkin declined to comment on the talks, saying there were no concrete plans to sell at present.

Analysts say Deripaska would be the most likely buyer, given the high price tag for a 25 percent stake in Norilsk, estimated at $12.5 billion based on its current market capitalization. Deripaska has also indicated that he would like to diversify into other base metals.

"These rumors have been circulating for a while," said Sergei Rubalkov, a spokesman for Basic Element, Deripaska's holding company. "We cannot confirm them."

Some analysts have suggested that Deripaska, who is known for his close ties to the Kremlin, could buy Prokhorov's Norilsk stake on behalf of the state, giving the government a stake in metals sector, where its influence is notably absent.

Analysts said Potanin could yet buy out Prokhorov, although it is doubtful that he could raise the money, given the steady rise in Norilsk's share price this year. "It's a lot of money. I think theoretically Potanin would be interested, but I'm not sure if he could finance such a buyout, or if he would even think it economic," said Sergei Donskoi, a metals analyst at Troika Dialog.

Earlier this month, Interros announced that Potanin would buy out Prokhorov's interest in the holding. But signs that the asset division will reach an amicable conclusion appear premature, analysts said.

"This conflict of interests between the two major shareholders is still unresolved despite the early October agreement," said Dmitry Smolin, a metals and mining analyst at UralSib.