| Thu 15 Apr 2004, 9:59 | | Kremlin probe of Norilsk deal may take time' |
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Kremlin probe of Norilsk deal may take time'
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Russian purchase of stake in Gold Fields may still come under scrutiny
Moscow Correspondent
RUSSIAN government agencies, including the central bank, say they have begun a review of details of Norilsk Nickel's $1,16bn purchase of Gold Fields shares from Anglo American.
The money reached Anglo American's account on April 5, and the shares have been transferred to Norimet, the Norilsk Nickel affiliate in London.
A Moscow source close to the central bank said the central bank's policy was to discourage substantial foreign borrowing by Russian corporations. In cases of acquisitions abroad, such as Norilsk Nickel's purchase of a 20% stake in Gold Fields, the source said the Russian company had a six-month period in which it might either opt to return its cash to Russia or obtain the required central bank approval for the offshore capital transfer.
A source at the security council, a Kremlin body that advises President Vladimir Putin on economic security issues, said: "We will process this information, and if it will cause interest in some of our departments it will be processed and the necessary steps will take place."
Kremlin sources report that a year ago the council members, who include heads of the defence, intelligence, internal security and foreign policy agencies, advised Putin not to allow the sale of Yukos to a US oil group. When Yukos CEO Mikhail Khodorkovsky resisted Putin's veto he was arrested on corporate-fraud and other charges.
A central bank spokeswoman cautioned against expecting any response from the bank soon on the Norilsk Nickel transaction. The bank's press office was "not an organisation which has the ability to hurry up and remind bank executives of something".
A presidential administration official said officials were looking at the issues, but she also cautioned against expecting an early public statement.
To fund its purchase of Gold Fields, Norilsk Nickel provided 316m out of operating cash, and borrowed $800m from Citibank. Before this transaction, the largest loan the Russian company had negotiated was a $350m preexport finance credit, secured by nickel sales.
Officially, Norilsk Nickel claims the Citibank loan at an interest rate reported to be 1,5% over the London Interbank offered rate for Eurodollar funds for six months is unsecured.
Citibank sources differ on the security. Unofficially, a Citibank source said the loan was secured by nickel, but details of how this had been arranged were not available. Officially, Citibank is saying the loan is unsecured.
Executives refuse to say how and why they decided to raise their exposure to Norilsk Nickel sixteenfold from less than $50m last year, tightly secured by metal sales, to $800m, without taking security over the Gold Fields shares or future receivables.
What is confirmed is that Citibank negotiated the financing in less than 10 days, and that lender recourse has been established with Norilsk Nickel in Moscow. Citibank will not say which executives were responsible for its lending decision.
The Russians who negotiated the deal with Citibank have been identified as co-owner and CEO Mikhail Prokhorov, finance director Leonid Rozhetskin, his assistant Dmitri Razumov, and perhaps Vladimir Potanin, co-owner with Prokhorov of Norilsk Nickel.
Citibank executives fear that a Russian government investigation of the deal may put other banks off joining the syndicate Citibank is trying to assemble for refinancing the $800m loan at the end of six months.
Apr 15 2004 07:09:15:000AM John Helmer Business Day 1st Edition
Thursday
15 April 2004
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