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. Last Updated: 07/27/2016

Deripaska To Cut KAP Stake

Oleg Deripaska, whose companies are trying to renegotiate more than $20 billion of debt, agreed Thursday to cut his stake in a Montenegro aluminum smelter and will fire 1,500 workers at aircraft maker Aviacor.

He will give 50 percent of his shares of Kombinat Aluminijuma Podgorica to the government of Montenegro in exchange for power subsidies and 135 million euros ($188 million) of guarantees used to repay debt and boost working capital, KAP said in a statement.

Aviacor, which makes the An-140 turboprop airplane, will cut jobs as it seeks to break even by September, the company said in a separate statement. The United Aircraft Corporation, a state-controlled aerospace group, may become a shareholder, Aviacor said.

En+, the unit of Deripaska's Basic Element holding company that controls KAP, said in January that it was forced to start talks with Montenegro after aluminum prices collapsed. The company said at the time that it might have had to shutter KAP, which accounts for 51 percent of Montenegro's exports.

Montenegro and EN+ subsidiary CEAC will each hold a 29 percent stake in KAP after the share transfer. Montenegro will get a seat on KAP's board.

EN+ and Montenegro will reconsider the pledge in Basic Element's 2005 purchase agreement for KAP to invest 40 million euros in the plant, KAP said in the statement.