SUAL’s co-owner Viktor Vekselberg, Rusal’s owner Oleg Deripaska and Glencore’s head Ivan Glasenberg (left to right) are to be partners for at least 5 years.
Photo: Pavel Smertin
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Rusal, SUAL & Glencore Announce Merger
Rusal, SUAL and Glencore has signed a merger agreement. United Company RusAl will be created before April 2007 and registered outside Russia. Minority shareholders of SUAL, however, opposed the deal. Quite possibly, the new RusAl will have to go to great expenses to settle the row.
Rusal’s owner Oleg Deripaska, SUAL’s co-owner Viktor Vekselberg and Glencore’s head Ivan Glasenberg announced an agreement on merging the assets on Monday. United Company RusAl will combine bauxite and aluminous deposits of Rusal, SUAL and Glencore. The company will also get Rusal’s 50 percent in Bocharov energy and metallurgy combine and Komi Alyuminiy, owned by Rusal and SUAL on a parity basis. Only four Russian plants of the deal’s members will not find a place in the new company.
The combined company will become the world’s biggest aluminum maker, estimated to worth $25-30 billon. The giant will produce 4 million metric tons of aluminum (or 12.5 percent of the world output) and 11 million tons of alumina (16 percent). The profit is to reach $10 billion a year. EN + of Oleg Deripaska’s Basic Element will control 66 percent in the company. Viktor Vekselberg and his partners will hold 22 percent while Glencore will have the remaining 12 percent. The deal is to be completed by April 1, next year. United Company RusAl will be set up outside Russia, according to Dmitry Afanasyev, chair of the partners committee at Egorov, Puginsky and Afanasyev, the company which consulted the parties of the deal. “The parties have come to an agreement that British law should be applied to regulate relations between shareholders,” Afanasyev told Kommersant.
The lineup of RusAl’s shareholders will remain unchanged for the next five years, Viktor Vekselberg said. The company will go public within three years after the deal. RusAL can sell about 20 percent of its shares in an IPO on the London exchange. All owners of RusAl will have to take part in the offering in respective proportions. Should the IPO fall through, Rusal will buy out SUAL’s stake, according to a source of Kommersant. Glencore also has an opportunity to leave the company after the IPO.
RusAl’s future director general Alexander Bulygin has large-scale plans for the new aluminum giant. The company is expected to deal mainly with non-ferrous metals which are traded at exchanges. However, the company’s first project in non-aluminum business may concern a non-traded metal, Kommersant learnt. A manganese project of the Renova group in South Africa my also enter the joint company, Deripaska and Vekselberg told Kommersant. However, it will not mean that SUAL’s share in the joint venture will rise – Vekselberg’s company will simply buy the project.
RusAl will need money not only for new projects but also for settling rows with minority shareholders of the member companies. SUAL’s shareholder Yury Kolodkin who owns 60,000 stocks in the company, or less than 1 percent, went to the Court of Arbitration of Sverdlovsk Region last week, asking to invalidate a decision of SUAL’s board of directors as of September 4. The decision upheld a demand of Alu Process Holding which holds 96.31 percent in the company on the forced buy-out of minority shareholdings. “Our client is against any kind of forced alienation of property,” Roman Rechkin who represents the plaintiff told Kommersant. “We would like to receive a share in the combined company; otherwise we will challenge the merger.” He said that lawyers were filing an applications to seize SUAL’s stocks of the plaintiff to block the discarding of the securities.
Independent legal experts say that this kind of lawsuit cannot be supported by the Russian law on stock companies. “The law has it that claims of minority shareholders against their exclusion cannot suspend or invalidate the exclusion,” Dmitry Stepanov of Yukov Khrenov & Partners said. “The only way of defense for minority shareholders is to claim a higher price for the stocks they are forced to sell.” The lawyer believes that the minority shareholders are being excluded to avoid any potential lawsuits, which will help secure the merger. “But to make it happen, all conflicts around the exclusion of minority stockholders has to be settled before the merger. Otherwise, trials may send the company’s price down,” Stepanov said. The head of the analytical department at Veles Capital, Mikhail Zak noted that tending to the trials SUAL will have to pay more to minority shareholders than they would have received in the merger.
Alexander Bulyugin told Kommersant that the merging parties had been perfectly aware of possible claims from minority shareholders. The agreement between Rusal, SUAL and Glencore contains a solution. If the companies fail to buy out the minority stakes by April, they would transfer the money for the purchase to the combined RusAl. Earlier, Rusal and SUAL said they were ready to spend as much as $130 million to buy out the shares. The companies have not reported yet how many stocks they have managed to buy out.
Maria Cherkasova and Olga Pleshanova
All the Article in Russian as of Oct. 10, 2006
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