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Russian state bank VTB sells its shares in Norilsk Nickel

Reports have indicated Russian state bank VTB offloaded all of its shares in Norilsk Nickel in the miner's $3.5 billion buyback. VTB deputy Chief Executive Vasily Titov, was quoted Wednesday saying the bank had undertaken the divestment. Norilsk Nickel is the world’s largest palladium miner. Titov is also the chairman of Norilsk Nickel's board.


VTB held around 1 per cent of the world's largest palladium miner as of October 2010, when Norilsk held its last shareholder meeting. The buyback netted around 7 per cent of Norilsk shares. Norilsk's main owner, businessman Vladimir Potanin's Interros group, last year refinanced a VTB loan secured by 13 per cent of Norilsk Nickel with a $2 billion loan from top state bank Sberbank.


According to the bank, the buyback garnered more interest than expected. It had been speculated that the buyback price was not satisfactory, in light of rallying copper prices. However, the Wednesday buyback remains suspended on the order of a Caribbean court. The suspension is a result of an ongoing dispute with RUSAL, an aluminum giant, which, like Interros, owns 25 per cent of Norilsk Nickel.


RUSAL has $11.7 billion in debt but turned down a $13 billion offer from Norilsk for its stake, preferring a dividend payout. However, according to the miner, the buyback was suspended due to the court injunction filed by RUSAL.


On Tuesday, RUSAL issued a statement reiterating that Norilsk subsidiaries Raleigh and Corbiere, which were the vehicles for the buyback, were barred by the court from voting or transferring the shares. If the shares are not voted, RUSAL's influence at an upcoming board meeting would increase.


But in statement, Norilsk said the RUSAL statement was misleading and inaccurate. The aluminum giant says it believes the buyback is complete and the shares are now held by the two subsidiaries.


Bank VTB, former Vneshtorgbank, is one of the leading universal banks of Russia and the largest in terms of authorized capital. As of 31 December 2005 according to IFRS (consolidated), its shareholders equity totaled $5.3 billion. In December 2007 the bank sold its 5% stake in the European Aeronautic Defense and Space Company, which it purchased for $1 billion in 2006, to the Russian Development Bank VEB for $1.45 billion.


Norilsk Nickel is a nickel and palladium mining and smelting company. Norilsk Nickel is headquartered in Moscow and is the world's leading producer of nickel and palladium. The company is also active in platinum, copper and cobalt.


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