UC Rusal indicated on Monday (29th September) that it intends to challenge a $4.4 billion buyback of shares in Norilsk Nickel by three of its subsidiaries.

At an emergency shareholders' meeting, Rusal described the buyback of 8.7 per cent of the company's shares as a "serious violation" of corporate governance standards.

The controversy revolves around Rusal's allegation that Russian billionaire Vladimir Potanin used company money to further cement his grip on Norilsk.

However, Interros, Mr Potanin's holding company, has responded by stating that the move was made in the "best interests of the company" and that other Russian firms have operated similar schemes.

Rusal has been engaged in a running battle for control of Norilsk since it bought a 25 per cent stake back in April to rival the 30 per cent stake of Mr Potanin, who holds sway with the majority of the nine-man board.

A similar buyback of four per cent was announced earlier this year and if the latest deal is completed, Mr Potanin will effectively possess around 43 per cent of the company's shares.

Renaissance Capital Senior Metals and Mining Analyst Rob Edwards has warned that the deal would land Norilsk $1.4 billion in debt - another blow to the company after its market capitalisation shrunk from $60 billion in May to the current $25 billion.

Source:
Rusal to challenge $4.4bn Norilsk buyback (29/09/08)
http://www.ft.com/cms/s/0/c2a325f4-8e4e-11dd-9b46-0000779fd18c.html?nclick_check=1