January 18, 2018 / 12:35 PM / 4 months ago

Kazakh tycoon wants Petropavlovsk ex-CEO back, sees M&A opportunities

ALMATY (Reuters) - Kazakh businessman Kenges Rakishev, having bought a large stake in Petropavlovsk (POG.L) last month, says he wants to see Pavel Maslovskiy reinstated as chief executive of the Russian mid-sized gold producer.

FILE PHOTO: Kazakh businessman, Kenges Rakishev, attends the launch of Israeli start-up, Mobli Media Inc, in Tel Aviv, Israel June 15, 2015. REUTERS/Baz Ratner

The unexpected deal, in which Rakishev purchased a 22 percent stake in the London-listed company from Russian billionaire Viktor Vekselberg for an undisclosed sum, was the latest twist in a row surrounding Petropavlovsk. Petropavlovsk witnessed shareholder conflict over control of the company that culminated in the resignation of Maslovskiy, one of its co-founders, as CEO in mid-2017.

“From my point of view, nobody came out of this (infighting) victorious,” Rakishev said in an interview with Reuters.

“Maslovskiy must complete the POX plant,” he added, referring to a major project aimed at boosting the company’s output. “I would like (to see him return).”

Asked whether he favored reinstating the second co-founder and ex-chairman of the firm, Peter Hambro, Rakishev said he had not yet considered that. Hambro had run the company since founding it in 1994 but left in 2017 amid the shareholder row. M&A

Rakishev wants Petropavlovsk to look into potential acquisitions in Russia and Central Asia as he plans either to join its board or appoint a representative to it. He said he planned to meet Petropavlovsk’s board members and fellow shareholders soon to discuss his proposals.

“It would be logical to consider further M&A in Russia itself,” he said. Petropavlovsk’s market capitalization is $370 million, according to Reuters data.

Rakishev did not identify any potential targets but said that during talks on the Petropavlovsk stake purchase, which started last September, he had also discussed a potential acquisition of Vekselberg’s other gold asset, Zoloto Kamchatki.

“I will also propose (acquisitions in) other countries, for example in Central Asia,” he said. “Geographic diversification wouldn’t be a bad thing.”

However, Kazakh gold mining assets, in some of which Rakishev had previously invested, are now too expensive compared with the Russian ones, he said. A replacement of short-term bank loans with long-term bonds by Petropavlovsk last year could allow the company to attract fresh financing, Rakishev said. In early December, Russian newspaper RBC cited two sources saying another Russian mid-sized gold producer, GV Gold, was buying Zoloto Kamchatki. Both sides have declined to comment.

Asked whether he would consider consolidation with GV Gold, Rakishev said he was open to all options.

BTA

Rakishev’s past investments include Altynalmas, a Kazakh gold miner which he says he helped sell to celebrity investor Robert Friedland’s Ivanhoe Mines.

    But his main business today is distressed asset management company BTA, formerly a bank, which is trying to collect billions of dollars from fugitive Kazakh tycoon Mukhtar Ablyazov.

    Ablyazov was chairman of BTA, then Kazakhstan’s biggest lender, when the Astana government nationalized it in 2009, citing a need to prevent its collapse following the global financial crisis.

    Ablyazov, who fled Kazakhstan, called the move politically motivated. The Kazakh government accused him of effectively channeling some $6 billion out of BTA and into his coffers. Ablyazov has denied the allegation.

    While Astana’s efforts to have Ablyazov detained and handed over have been futile - a French court set him free and canceled his extradition order in 2016 - BTA’s separate pursuit of his assets has yielded some results.

    BTA has secured judgments for about $4.5 billion, which it is now trying to enforce. As part of those efforts, last year BTA obtained an order in the English High Court that froze a 13.2 percent stake in Kazakhstan-focused Nostrum Oil and Gas (NOGN.L) held by Claremont Holding Ltd.

    Last June, BTA agreed to acquire from Claremont a 3.76 percent stake in Nostrum and secured the right to gain Claremont’s remaining 9.44 percent holding. The sides disclosed no financial details.

    This week, Rakishev said that to avoid depressing Nostrum’s stock price, BTA, Claremont and Nostrum were finalizing a deal under which BTA would receive some cash and one of Nostrum’s Kazakh assets instead of the remaining shares, which it would have otherwise sold on the market.

    BTA plans to sell the Kazakh asset, an oilfield, Rakishev said.

    Nostrum, which was not involved in last year’s settlement between BTA and Claremont, said it did not comment on market speculation. Claremont owner and former Nostrum chairman Frank Monstrey could not be reached for comment.

    Ablyazov, contacted by Reuters, said he had nothing to do with Nostrum or Claremont and described BTA’s claims against him as part of a government-orchestrated campaign.

    Rakishev, who first invested in BTA in 2014 when the government decided to dispose of it, says he is driven by purely financial interest.

    “We would like to enforce the $4.5 billion court judgment,” he said. “Unfortunately, no one knows to what degree this is possible and how much is still left in terms of real assets.”

    Reporting by Olzhas Auyezov; Additional reporting by Polina Devitt in Moscow; Editing by Dale Hudson

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