#10 - JRL 7286
Wall Street Journal
August 12, 2003
Russian Tycoon Seeks to Sell Stake in Russian Aluminum
By JEANNE WHALEN
Staff Reporter of THE WALL STREET JOURNAL
MOSCOW -- Roman Abramovich, a major shareholder in Russian industry, is seeking to sell his 50% stake in Russian Aluminum, the world's second-biggest producer of primary aluminum, according to an individual who has participated in talks on the matter.
The attempted sale of the shares, which the individual estimated are valued at about $2.5 billion, coincides with mounting government pressure on big business, although the individual said he wasn't certain that had played a role in Mr. Abramovich's decision.
Spokesmen for Mr. Abramovich and Oleg Deripaska, his main partner in Russian Aluminum, declined to comment Monday on whether Mr. Abramovich's Russian Aluminum shares were for sale. The individual said he believed that Mr. Deripaska has the first right of refusal on any share sale.
Some investors say they would interpret Mr. Abramovich's sale of the aluminum shares as a sign of mounting risks in Russia. Investor confidence was shaken last month by the arrest of oil billionaire Platon Lebedev, a move that many Russian businessmen believe was politically motivated. Federal prosecutors have charged Mr. Lebedev with fraud and denied any political subtext. Mr. Lebedev denies any wrongdoing.
Mr. Abramovich last week called the arrest and other legal moves against oil concern OAO Yukos "disturbing" but denied speculation that he plans to sell all of his assets in Russia , which also include stakes in the auto, oil and food industries.
"Trust has been undermined. Trust in the government, trust in institutions," Mr. Abramovich said in remarks made Aug. 5 and released by his spokesman Monday. "However, this will be forgotten quickly ... in the end it will all work out OK," he said. "We are selling some things and buying other things" in Russia , he added.
Mr. Abramovich and a handful of other Russian businessmen bought many of their assets from the state in the mid-1990s in privatization auctions. Although the sales, at which many assets went for bargain prices, are still tainted by allegations of corruption, they had been tacitly accepted under President Vladimir Putin, helping create stability and economic growth.
Many businessmen see the recent legal moves against Yukos as a threat to this stability. Some believe Yukos chief Mikhail Khodorkovsky invited trouble by funding political parties opposed to the Kremlin. Other insiders believe Putin aides may be leading the attack in order to wrest cash or assets from Yukos.
A Russian official last month denied that Mr. Putin started the campaign and said the president was concerned by the damage it was doing to perceptions of Russian stability. The official said BP PLC had asked the Kremlin to explain the moves, worried that they could harm its planned $6.15 billion purchase of half of a Russian oil company. BP says the purchase is proceeding as planned.
Mr. Abramovich also owns a majority stake in OAO Sibneft, an oil company that plans to merge with Yukos. Russia's antimonopoly ministry is set to approve or deny the merger in the coming days, a ruling that investors are watching as a gauge of whether Yukos's troubles will spread to other companies.
Mr. Abramovich bought England's Chelsea soccer club for about $100 million in June, helping fuel speculation that he might be unloading Russian assets and seeking investments overseas.
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