General Victory. Deripaska won the court case against Potanin and Abramovich over Nornikel

In fact, the court sided with Oleg Deripaska, but in practice the decision may be beneficial to all three parties in the process

The High Court in London has ruled that Crispian Investments Limited, owned by Roman Abramovich #17 and Alexander Abramov #21, has no right to sell 2.1% of Norilsk Nickel to Vladimir Potanin’s structure #2 Bonico Holdings. This was reported by Reuters from the courtroom.

Representatives of Norilsk Nickel and Abramovich declined to comment on the court ruling. Rusal said it welcomes today’s ruling by the London court, “which fully confirms the validity of Rusal’s position”.

UC Rusal (48 percent of the aluminum giant is owned by Oleg Deripaska 50 percent through En+) demanded a ban on the deal. The company has argued that the deal violates the agreement of 2012. Then, with the mediation of Roman Abramovich, Potanin and Deripaska concluded a five-year settlement agreement, under which the former governor of Chukotka also received a stake in the mining and metallurgical giant.

The decision is an episode in the nearly 10-year battle surrounding Nornikel, one of the world’s largest producers of nickel and palladium. The history of confrontation between the billionaires goes back to 2007, when Mikhail Prokhorov sold 25% of the company to Oleg Deripaska. The businessmen had different opinions on the future of the metallurgical company; Deripaska believed that most of the proceeds should be earmarked for dividends while Potanin was convinced that free cash should be invested in production.

Five years later, the parties signed a notorious agreement for another five years. In December 2017, it expired, and the conflict between Nornikel’s shareholders erupted with renewed force. Potanin’s structure sent Crispian, which intended to sell 4% of Nornikel shares, a buyout offer. Rusal responded with an appeal to the British court. In the end the parties agreed that Interros would buy out 2.1%, but if the court recognized that it was in breach of the agreement, it would be annulled.

That’s exactly what happened – the court ruled that it was in breach of the shareholder agreement. “To overturn the decision of the high court in London, the losing party needs to prove only one thing – the court misinterpreted the terms of the share sale deal with the terms of the shareholder agreement,” says Pavel Ivchenkov, a partner at the Delovoy Farvater law firm. In his opinion if the failed purchaser can prove in the court of appeals that there was no violation of shareholder agreement the deal will be recognized lawful. “Assuming the general nature of the shareholders agreement and the possibility of its ambiguous interpretation, it is possible that the court of appeal will overturn the decision of the high court in London,” he concludes.

It is not yet clear how the court ruling will affect Norilsk Nickel’s business. ACRA analyst Maksim Khudalov assumes that both parties are not really interested in execution of the deal, because current quotes are considerably lower than the ones used in the deal. “In this regard, the reversal of the deal will allow the parties to repeat the deal at more attractive quotations later,” he suggests.

“As for the quotes, they may be supported by the expectation that in the struggle for control the parties will continue to buy shares from the market,” the expert continues. According to him, one should hardly wait for changes of the dividend policy: Nornickel’s investment program will remain high and the company’s quotations will most likely grow against the background of the ongoing struggle for the company.

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