RUSAL, THE world’s top aluminium maker and owner of Aughinish Alumina, took a $1.4 billion hit in its 2011 financials on the value of its stake in Norilsk Nickel, whose fate is at the centre of a row between two Russian billionaire shareholders.
Monday’s writedown, and a cautious note from auditor KPMG on Rusals valuation of its stake in the Arctic miner, will likely add to friction between Rusals chief executive and main owner, Oleg Deripaska, and disgruntled minority investors led by Sual Partners Viktor Vekselberg.
The charge, resulting from a series of share buybacks by Norilsk last year, pushed Rusals net profit down by 92 per cent to $237 million for the year. The Norilsk purchase, made at the top of the market in 2008, has caused Rusals shareholders to fall out over Deripaskas 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 criticising the choice of his successor. Rusal responded on Sunday by threatening to sue Vekselberg, who with partner Len Blavatnik owns 15.8 per cent of 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. “Rusal would not have taken such a loss if it had accepted one of the offers from Norilsk Nikel to buy back the stake, not to mention that the sale of the Norilsk Nickel shares would have allowed Rusal to resolve issues linked to a high debt burden” said Andrey Shtorkh, Sual Partners spokesman.
Rusal said fourth-quarter earnings before interest, tax, depreciation and amortisation (EBITDA), stripping out Norilsk, fell 46 per cent to $382 million. Full-year core earnings fell slightly to $2.5 billion. Despite the writedown, Rusal reported a carrying value for the Norilsk stake of $9.2 billion as of Dec. 31 - higher than a market value of $7.4 billion at the time and far below the estimated $14 billion paid in 2008. – (Reuters)
