Bloomberg News

Magnitogorsk Says Court Rejects Claim Against Flinders Purchase

August 01, 2012

OAO Magnitogorsk Iron & Steel, the Russian steelmaker blocked from buying Australia’s Flinders Mines Ltd. (FMS) this year, said a court in Chelyabinsk ruled that the claim against the deal was unfounded.

The judge dismissed the claim of minority Magnitogorsk investor Elena Egorova, according to Elena Evstigneyeva, a company spokeswoman. Egorova had said the purchase discriminated against her interests as a shareholder. The bid expired on June 30 and was terminated by Magnitogorsk, or MMK, on July 3.

“MMK is unlikely to renew talks with Flinders,” George Buzhenitsa, an analyst at Deutsche Bank AG, said by phone.

Egorova, who holds less than 0.001 percent of Magnitogorsk, won a court injunction in March preventing completion of the A$554 million ($583 million) deal, which came as MMK struggled to cope with a $4.2 billion debt burden. The company’s subsequent attempts to lift the order failed.

Flinders said last month it plans to start talks with other potential investors. The company is building an iron-ore mine in Australia’s Pilbara region and needs to finance the first stage of the project, which may cost as much as A$488 million, according to a company study published last year.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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