Power Grab at Norilsk Nickel Likely if Deripaska Goes Broke, Global Insight Reports

Power Grab at Norilsk Nickel Likely if Deripaska Goes Broke, Global Insight
Reports

MOSCOW, Oct. 23 /PRNewswire/ -- Russia's richest man is having money troubles,
and the country's largest nickel producer could change hands as a result.
Forecasting firm Global Insight reports that Oleg Deripaska is running out of
time and money to pay back the USD 4.5 billion he borrowed from a group of
foreign financial institutions in April 2008 to purchase a 25% share in
Norilsk Nickel. Deripaska used the shares in the nickel producer as
collateral, but their value has since plummeted to the point that they no
longer cover the money he owes; Deripaska now needs USD 1.8 billion to
refinance the loan, according to the report.

Deripaska's creditors have granted him an extension until the end of the
month, but it is unlikely they will be so generous again. The oligarch has
already sold his assets in Canadian automotive parts maker Magna and German
construction company Hochtief, but these deals still have not produced enough
funds to pay off the debt, the report states. Having exhausted every other
possibility, Deripaska is now seeking help from the state.

"Deripaska has turned to Vnesheconombank (VEB), a state corporation used by
the government to manage state debts and pension funds and that receives funds
directly from the state budget," Global Insight reports. His request: a USD 50
billion aid package for Russian companies seeking to restructure foreign debt.
The VEB board, headed by Prime Minister Vladimir Putin, is "considering
Deripaska's application, but this will take 18 days -- and Deripaska needs the
money now," the firm reports.

If the bureaucratic process cannot be sped up, Deripaska will have to sell his
stake in Norilsk. In that event, there are several potential bidders,
including VEB itself and nearly all of Russia's prominent oligarchs. VEB would
like to keep the company out of foreign hands. Norilsk Nickel founder and
primary shareholder Vladimir Potanin is a likely bidder, seeing as he and
Deripaska wrestled for control of the company in the past. Norilsk co-founder
Mikhail Prokhorov, who created the mess by offering Deripaska the stake in the
first place, is also interested. Alisher Usmanov, owner of Matalloinvest
holding, has been pursuing ownership of Norilsk for years, with a view to
create the world's largest steelmaker.

In light of Deripaska's rocky relationship with the other Norilsk
shareholders, Global Insight concludes that his departure may actually benefit
the company: "For minority shareholders, the change of owner may actually
bring more certainty, as the boardroom struggles between Potanin and Deripaska
in July and August have undermined the company. Whoever replaces Deripaska
should ideally have a long-term vision for the company's growth, preferably in
agreement with Potanin."

SOURCE Global Insight

Irina Pavlova, Global Insight/OB, +1-646-257-2003