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. Last Updated: 07/27/2016

Deripaska Will Appeal To Move London Suit

Oleg Deripaska, the majority owner of United Company RusAl, will this week seek to have London's High Court dismiss a multibillion-dollar lawsuit filed by former associate Michael Cherney, a person close to Deripaska's Basic Element holding said Friday.

Cherney is claiming a stake of 13.2 percent in the world's largest aluminum producer, worth an estimated $4.35 billion.

Deripaska on Friday will appeal the court's decision in July to consider the case in Britain and argue that it be heard in Russia instead, said the person, who spoke on condition of anonymity because he was not authorized to speak to the media ahead of the hearing.

Cherney's lawyers said in an e-mailed statement Sunday that they were confident that the appeal would be rejected.

"It is in the interests of Mr. Deripaska to solicit a truce as soon as possible because the initial sum of $4.35 billion may increase significantly as the dividends unpaid for the shares in question add up," a source close to Cherney said by telephone. He spoke on condition of anonymity, citing lawyers' advice.

The London court said in July that Cherney made a "good arguable case" of the risks of a trial in Russia, including "assassination, arrest on trumped-up charges and lack of a fair trial."

Cherney, a controversial figure in the Russian aluminum industry in the 1990s who now lives in Israel and invests in high-tech and real estate, has accused Deripaska of seizing a stake being held in trust in their joint aluminum business.

Cherney said he helped Deripaska get his start in the just-privatized aluminum industry, giving him money and helping him get a job as general director at a smelter in Sayanogorsk, according to London court documents obtained by The Moscow Times. The plant later became the cornerstone of Deripaska's aluminum empire.

Cherney said he first met with Deripaska in late 1993 or early 1994, according to the court documents.

Deripaska has said Cherney had never been his business partner "in any normally accepted commercial meaning of the word" and that the two had became acquainted in May 1994.

Deripaska was the biggest private shareholder with 8.85 percent in the Sayanogorsk plant by Oct. 1, 1993, the source close to BasEl said.

The source said cooperation began between Trans World Group, or TWG, a metals trader co-owned by Cherney, and Alinvest, an investment vehicle controlled by Deripaska, in July 1994. By then, Alinvest had consolidated about 12 percent of the plant's shares, while Russky Capital, a TWG-controlled holding, had about 4 percent, the source said.

TWG and Deripaska cooperated in buying shares in the plant because Alinvest had a brokerage license and Deripaska needed TWG to buy shares to prevent their price from sharply rising, the source said.

By Nov. 15, 1994, when Deripaska was elected general director of the plant with 98 percent of shareholders' votes, his firms had consolidated up to 23 percent of the plant's shares, while TWG had a similar figure, the source said.

Cherney said he and Deripaska each owned 50 percent in Siberian Aluminum, or SibAl, until 1998, when they reduced their stakes to 40 percent apiece, according to the court documents. Two other people, Anton Malevsky and Sergei Popov, each acquired 10 percent stakes, Cherney said.

SibAl later merged with the aluminum assets of Sibneft to form Russian Aluminum, or RusAl. SibAl and Sibneft each took 50 percent stakes in RusAl. Cherney said he was entitled to 20 percent of RusAl after the deal.

In March 2007, RusAl merged with SUAL and Glencore's alumina assets to become the world largest aluminum producer. The share Cherney was claiming was reduced from 20 percent to 13.2 percent, which he says is worth $4.35 billion.

Cherney said in the court documents that the heart of the conflict between him and Deripaska lies in two agreements signed at London's Laneborough Hotel on March 10, 2001. In the first document, Deripaska agreed to pay Cherney $250 million up front for his shareholding in SibAl, while the second document obliged Deripaska to hold 20 percent of RusAl's shares in trust and sell them between 2005 and 2007 on Cherney's behalf, Cherney said.

Deripaska said the second document was to go to Malevsky, not Cherney, according to the court documents.

Deripaska has paid the $250 million. Malevsky died in a parachuting accident in South Africa in 2001.