United Co. Rusal (486), the world’s biggest aluminum producer, said it hired legal counsel to advise on arbitration brought by Sual Partners Ltd. to overturn trading contracts with Glencore (GLEN) International Plc.
Rusal received the request for arbitration on April 4, made to the London Court of International Arbitration, the Moscow- based company said in a statement today. Sual, Rusal’s third- biggest shareholder, is suing the aluminum producer and Glencore as well as Rusal Chief Executive Officer Oleg Deripaska and his En+ Group, Rusal’s biggest shareholder, according to the statement.
Sual, controlled by billionaires Viktor Vekselberg and Len Blavatnik, accused EN+ and Swiss trader Glencore of breaching a 2007 shareholder agreement for pushing through new contracts without its consent, three people with knowledge of the matter said on April 6. The lawsuit escalates a shareholder conflict over Rusal management’s decision to hold on to 25 percent of OAO Norilsk Nickel.
“We haven’t upgraded the stock because we felt this conflict has too many uncertainties,” Robin Tsui, a Hong Kong- based analyst with BOC International Holdings Ltd., said today by phone. The differences seem to be “more about pride than money,” he said.
Glencore, which owns 8.75 percent of Rusal, said in a statement today it received a request for arbitration on April 4 and doesn’t intend to comment further on the proceedings.
Rusal shares were unchanged at HK$5.76 as of the 4 p.m. close in Hong Kong. The stock has fallen 56 percent in the past year, compared with a 16 percent decline in the benchmark Hang Seng index.
Vekselberg quit as Rusal chairman last month, saying the company is facing a “deep crisis” in part because of its refusal to sell the stake and reduce debt.
The company will “vigorously defend its position” and the arbitration is not expected to have “any material adverse impact on its operations,” Rusal said in the statement.
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