RUSAL takes $1.4 billion writedown on Norilsk stake

Mon Mar 19, 2012 7:35am EDT
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By Alison Leung and Megan Davies

HONG KONG/MOSCOW (Reuters) - RUSAL (0486.HK: Quote), the world's top aluminum maker, took a $1.4 billion hit in its 2011 financials on Monday on the value of its stake in Norilsk Nickel (GMKN.MM: Quote), whose fate is at the centre of a row between two Russian billionaire shareholders.

The writedown, and a qualified opinion by RUSAL's auditor on the valuation of its stake in the Arctic miner, are likely to add to friction between RUSAL's CEO and main owner Oleg Deripaska and disgruntled minority investors led by Viktor Vekselberg.

The charge, resulting from a series of share buybacks by Norilsk last year, pushed RUSAL's net profit down by 92 percent to $237 million for the year.

The Norilsk purchase, made at the top of the market in 2008, has caused RUSAL's shareholders to fall out over Deripaska's refusal to accept offers from Norilsk to buy back the stake.

Vekselberg resigned as chairman last week, saying the company was in "deep crisis", threatening legal action and criticizing the choice of his successor.

RUSAL responded on Sunday by threatening to sue Vekselberg, who with partner Len Blavatnik owns 15.8 percent RUSAL, saying his comments had damaged its reputation and shareholder value. Its board on Friday elected Hong Kong Mercantile Exchange Chairman Barry Cheung as its new chairman.

The boardroom row has highlighted a bitter dispute over how to relieve the company of an $11 billion debt burden inherited from its purchase of the Norilsk stake.

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People enter an office of RUSAL company in Moscow March 19, 2012. RUSAL, the world's top aluminium maker, posted a 92 percent drop in yearly net profit, hit by a write-down in the value of its stake in miner Norilsk Nickel as it grapples with a damaging row over its future between two Russian billionaires. The sign reads "RUSAL. The management company". REUTERS/Denis Sinyakov