December 19, 2018 / 5:59 PM / 4 months ago

Exclusive: Russia's Deripaska prepares to cede control of Rusal, En+ - sources

LONDON/MOSCOW (Reuters) - Russian tycoon Oleg Deripaska is preparing to cede control of Rusal (0486.HK) and its parent En+ (ENPLq.L), moving part of his En+ stake to a blind trust, as talks with the United States on lifting sanctions advance, three sources familiar with the talks said.

FILE PHOTO: Russian aluminum tycoon Oleg Deripaska leaves after the talks of Russian President Vladimir Putin with South Korean President Moon Jae-in at the Kremlin in Moscow, Russia, June 22, 2018. REUTERS/Sergei Karpukhin/File Photo

The U.S. Treasury imposed sanctions on Deripaska, aluminum giant Rusal, En+ and other companies in which he owns stakes, citing “malign activities” by Russia, prompting turmoil in global aluminum markets.

Deripaska has called the sanctions on him “groundless, ridiculous and absurd”.

After lobbying by European governments, Washington postponed enforcement of the sanctions and started talks with Deripaska’s team on removing Rusal and En+ from the blacklist if he ceded control in Rusal.

The deadline for complying with the sanctions was extended several times. It is now Jan. 21, 2019.

“Rusal and En+ are very close to a deal with OFAC (Office of Foreign Assets Control). They will likely be removed from the SDN sanction list while their ownership will moved to a blind trust,” one of the sources said. “It is a compromise for everyone.”

Rusal, the world’s second largest aluminum producer after China’s Hongqiao (1378.HK), and En+ declined to comment. Deripaska’s representative also declined to comment.

One of the three sources and three other sources familiar with the talks between Deripaska’s team and OFAC said the sides were very close to a deal and that it could be announced by the end of this week.

One source said the deal was still subject to approval from the Russian political authorities before a final agreement can be reached.

The blind trust, which would be run by independent administrators, has been mooted at least since June. 

However, the Christmas holiday next week may become an additional reason for OFAC to announce the agreement this week, sources said.

“Most people will be rushing off to do their shopping, buy presents. They may be hoping headlines along the lines of ‘(U.S. President Donald) Trump lifts sanctions on Russians’ will go unnoticed by most people,” another source said.

Deals with “strategic” Russian companies the size of Rusal, which employs 62,000 people in Russia and other countries, are usually subject to close attention from the Kremlin.

Russia also has a history of defending its strategic groups to prevent them falling into control of foreign shareholders.

The Kremlin had not replied to Reuters request for comment by the time of publication. Russian President Vladimir Putin will hold his annual news conference on Thursday.

According to data from early 2018, Deripaska controls 67.6 percent of En+, which in turn controls 48 percent of Rusal. En+ said in April that Deripaska had agreed in principle to reduce his stake in the company to below 50 percent.

It was not immediately clear who would be in the team administrating the blind trust in case the final agreement is reached. But En+’s current board chairman Greg Barker is expected to be one of them, a banking source said.

A representative of Barker, who initially devised the plan for talks with the OFAC, declined to comment.

During a meeting on Thursday, En+’s shareholders will decide whether to give Barker powers to nominate independent directors to En+’s board of directors if talks with succeed.

Reporting by Pratima Desai, Katya Golubkova, Dmitry Zhdannikov, Tatiana Voronova, Polina Devitt, Darya Korsunskaya and Anastasia Lyrchikova; Additional reporting by Darya Korsunskaya and Oksana Kobzeva; writing by Polina Devitt; editing by Veronica Brown and David Evans

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