Deripaska takes on Potanin as mining tycoons battle in court

Norilsk Nickel operates some of the richest mines in platinum, palladium and nickel. (File Image)

(Bloomberg) — A deal that kept the peace at Russia’s biggest mining company for more than five years is starting to fray, leaving three billionaires fighting over the next move.

Attorneys for Oleg Deripaska, Vladimir Potanin and Roman Abramovich faced off in London court on Friday in a conflict triggered by Abramovich’s desire to sell his stake in MMC Norilsk Nickel PJSC, which could shift the shareholding balance.

“Investors are worried about the new feud in the company,” said Oleg Petropavlovskiy, an analyst at BCS Global Markets.

The deal stopped Deripaska and Potanin from their constant squabbling in court since 2012, when President Vladimir Putin intervened. In the agreement, Abramovich and his partners were allowed to buy a stake in exchange for resolving conflicts between Potanin and Deripaska.

Trouble is, Deripaska has too much debt to buy Abramovich’s stake and doesn’t want to cede more of the company to Potanin. The shares, held by Crispian Investment Ltd., was about 5 percent at the start of 2017, implying a current value of more than $1.5 billion.

Through their companies, Deripaska controls about 28 percent of Norilsk Nickel, which operates some of the richest mines in platinum, palladium and nickel. Potanin owns more than 30 percent.

Norilsk Nickel shares fell as much as 12 percent on Friday, the most since 2014. Rusal lost as much as 6.9 percent in Moscow.

United Co. Rusal, controlled by Deripaska, filed an injunction against Abramovich’s Crispian and Potanin’s Whiteleave Holdings Ltd. The attorneys met in court on Friday and agreed to delay proceedings until the week of March 5.

Lawyers for Abramovich and Potanin told the judge that delays would cause losses. All sides agreed to seek a speedy trial before a shareholder meeting in June.

‘Ticking bomb’

“We are holding a ticking bomb,” said Daniel Jowell, an attorney for Crispian, the company controlled by Abramovich.

Interros Holding Co., which is controlled by Potanin, confirmed to Bloomberg News that it had offered to buy Crispian’s Norilsk Nickel shares. Crispian has made a counteroffer, according to the press service, which called Rusal’s claim unjustified. Interros acted in accordance with the shareholder agreement, it said.

Crispian’s counteroffer was made to both Interros and Rusal, and the parties may split the stake if they both want to buy, according to people familiar with situation.

“We are tremendously affected if there cannot be a completion,” said Peter Goldsmith, who represents Interros.

Deripaska’s company can’t afford to increase its stake to more than 30 percent as it would trigger a mandatory offer for the rest of the company’s capital in accordance to Russian law, Petropavlovskiy said.

Rusal has over $7 billion in net debt and would have to use debt financing to buy additional shares, Petropavlovskiy said.

“We hope that the ongoing discussions, if they’re really taking place, won’t in any way interfere” with Norilsk Nickel’s development, Kremlin spokesman Dmitry Peskov told reporters on a conference call on Friday. He said the Kremlin isn’t involved in the dispute.

Rusal declined to comment after the court hearings. Abramovich’s spokesman John Mann declined to comment on a possible share sale or the court case.

(Written by  Yuliya Fedorinova and Jessica Shankleman)

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