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22 Oct, 2010 08:46

Norilsk Nickel board unchanged as Rusal continues to push

Norilsk Nickel shareholders voted against a Rusal led proposal to change the board of directors, at an extraordinary general meeting in Moscow.

Business RT spoke with Maksim Sokov, Director of Corporate Strategy at Rusal about the shareholder dispute between Rusal and Interros, starting with if he believed it was damaging Norilsk Nickel

MS: “Any dispute is affecting the company, but the question is whether the dispute leads to any positive trends or positive changes, and we believe that the whole idea which we are promoting, we were calling for this EGM, is to actually rebalance the board in a manner where, there will be no controlling shareholder.”

RT: Will Rusal try to take this conflict further, for example to the courts?

MS: “It is not a fight between two oligarchs, it’s a different story. It's about Rusal being a shareholder in Norilsk, trying to change the situation, and so that a very simple value enhancement plan is implemented?”

RT: Nornickel results are in line with international competitors. What is wrong with the running of the company?

MS: “It is really the best mine, but it has no strategy, and it has cash on the balance sheet. So either management should come to the board with a proper strategy which would include organic growth projects, and would explain us where these monies have to be spent – and that spending would create additional value to all shareholders – if that is not happening it should be paid out as a dividend.”

RT: Do you believe Nornickel minority shareholders actually support Rusal’s bid?

MS: “Absolute majority of independent shareholders have supported the idea for reelection. Neither of the big shareholders have ever had any dialogue with minority shareholders. Such a big support of minority shareholders is actually a big victory.”

RT: Does Rusal want to raise Norilsk Nickel’s dividends so it can pay off Rusal’s debt?

MS: “We are not looking for Norilsk to pay greater dividends, but we are just saying that the company should either spend money for organic growth projects, or the dividends should be paid out to the shareholders, for shareholders to effectively to decide what to do with these funds. We are repaying our debt way ahead of schedule. We do not need Norilsk dividends.”

RT: Doesn’t Interros also support the disposal of non core assets?

RT: “Yeah, but it's not a sale of OGK. From the media it looks like they are going to be proposing a swap between OGK shares and Inter RAO shares, which is effectively an exchange of one non core asset for another non core asset. In our programme we are supporting either monetizing the non core assets or spinning them off. As far as I know, from the media again, there is going to be a one year restriction for these shares no to be sold to the market.”

RT: Why is Rusal dealing with Interros through the media? Has communication broken down completely?

MS: “We have been talking to each other for quite a long period of time. Since 2008, we’ve been trying to implement this programme, but unfortunately nothing was happening. In this particular situation we had no other choice but to go public and talk to the minority shareholders.”