MOSCOW, Jan 29 (Reuters) - A six-company Russian mining merger proposed by Norilsk Nickel’s (GMKN.MM) top shareholders is unlikely to succeed due to the huge debts involved, metals tycoon Alisher Usmanov said in interviews published on Thursday.
Usmanov, co-owner of iron and steel company Metalloinvest, told Kommersant and Vedomosti business dailies he had offered a more modest proposal to merge his company with Norilsk, with the state taking part through its Russian Technologies conglomerate.
“Our concept implies a merger of two companies with an absolutely reasonable debt volume which could be converted into a state stake (in the new company),” Usmanov told Kommersant.
Russia’s steel and mining giants, which enjoyed record profits as commodity prices boomed, were left exposed to massive debt repayments as the global financial crisis reversed demand. Many have refinanced their loans with state-controlled banks.
Billionaires Vladimir Potanin and Oleg Deripaska this month proposed merging Norilsk, in which they both own a large stake, with Metalloinvest, steel makers Evraz Group HK1q.L and Mechel (MTL.N) and potash miner Uralkali (URKA.MM). [ID:nLJ564569]
The state, in exchange for a stake in the merged company, could write off each firms’ debt and contribute the stake in the world’s largest titanium maker, VSMPO-Avisma (VSMO.MM), held by Russian Technologies.
Usmanov said he doubted such a scheme would work.
“I think it is a veiled attempt to resist the state taking a stake in the companies,” Kommersant quoted Usmanov as saying.
“I believe that merging all (these firms), with their debts, is not feasible.”
Vedomosti quoted Usmanov as saying Potanin and Deripaska “do not want to lose control over Norilsk Nickel, and this is why they advanced the idea of such a merger”.
Usmanov said he was also examining a possible merger of Metalloinvest with assets owned by Russian Technologies, including special steel maker RosSpetsStal and stakes in Russian-Mongolian copper joint ventures and VSMPO-Avisma.
Russian Technologies is already teaming up with Metalloinvest to develop the huge Udokan copper field in eastern Siberia and will own at least a quarter of the consortium that will implement the project. (Reporting by Aleksandras Budrys, editing by Robin Paxton)