The Jeweled Nickel
Holders of AK ALROSA and GMK Norilsk Nickel (member of Interros Holding) are canvassing consolidation procedures, Krasnoyarsk Region's Governor Alexander Khloponin said in the first official statement related to the issue, involuntary confirming the rumors circulating on the market for nearly a year. More likely than not, the negotiations will ultimately result in establishing the state control over the metal giant, the more so that the Kremlin is said to be studying possible methods of returning Norilsk Nickel back into the state ownership. One of the scripts, for instance, provides for the deal amount of $4 billion, said a source close to Norilsk Nickel.
The talks that are underway between ALROSA and Norilsk Nickel may lead to creating a united company, where the state will control 25 percent plus a stock and the private investors will have the remainder, said Khloponin, who headed Norilsk Nickel from 1996 to 2001. "No final decisions on consolidation have been reached yet and it isn't the question of the near-term outlook," the governor specified.
"The government is definitely resolved to acquire a portion of Norilsk Nickel stocks, and if ALROSA doesn't become the buyer, it will be some other state company," said a source close to Norilsk Nickel, specifying the parties last met in late past summer to discuss legal and economic aspects of the deal. But no minutes or any other official documents have been ever sealed by results of negotiations, the source specified.
The presidential administration is studying a scenario that sets forth roughly $4 billion to be spent for Norilsk Nickel. "Today's capitalization of GMK Norilsk Nickel is $15.7 billion, while the capitalization of outsourced Polus Zoloto will be from around $7 billion to $8 billion. Therefore, splitting up Polus Zoloto will narrow GMK's value to $8 billion. As far as I know, the government intends to leave a half of $8 billion to the current holders of GMK [Vladimir Potanin, head of Interros, and Mikhail Prokhorov, GD at GMK Norilsk Nickel], and buy out the second half in the name of one of its divisions. In view that Norilsk Nickel's privatization was often questioned in early 2000's, the state will just recover the status quo as a result of this deal," the source speculated.
Khloponin might have thought better closer to the evening of the same day. His press service said the governor's words had been a bit misinterpreted. "No negotiations could be in progress between ALROSA and Norilsk Nickel, as both companies are reorganized now and unready for any merger," the press service quoted the governor as saying.
Norilsk Nickel called rumors the words of the governor and declined to comment. ALROSA's representatives didn't add anything to the previous statements made by ALROSA President Alexander Nichiporuk and by Finance Minister Alexey Kudrin, who heads the supervising board at ALROSA.
Kudrin said in November ALROSA had no offers concerning the purchase of Norilsk Nickel stocks and had never considered them. Nichiporuk called rumors unreasonable in December.
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All the Article in Russian as of Jan. 19, 2006
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