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Rusal Says Norilsk Buyback Is Void Without State Permission

United Co. Rusal said a letter from Russia’s antitrust watchdog confirms that a planned share buyback by OAO GMK Norilsk Nickel can’t go ahead without consent from the state.

The letter “confirms that the buyback is only possible upon permission from the government commission,” Rusal said in an e-mailed statement. “Without such a permission, any buybacks conducted by Norilsk Nickel are void.”

The Federal Anti-Monopoly Service wrote to Norilsk, billionaire Vladimir Potanin’s Interros Holding Co. and Citigroup Inc., which is managing the buyback, saying that it may require special approval, Vedomosti reported today. Norilsk, which is carrying out the buyback via a unit registered outside Russia, forms a single group with Interros and therefore requires permission from the foreign investment commission to buy the shares, the Moscow-based newspaper said.

Norilsk confirmed that it received a letter from the FAS, saying that it is part of “routine” correspondence and didn’t raise any specific requirements for a buyback. The company has taken legal advice that Norilsk and Interros don’t constitute a “single group,” and that the concept hasn’t been defined in Russia’s antitrust laws, the company said today in an e-mail.

Billionaire Vladimir Potanin’s Interros aims to raise its stake above 30 percent without triggering a mandatory offer to shareholders under Russian regulations by buying back and canceling the shares. He is seeking to increase influence over Norilsk at the expense of rival billionaire shareholder Oleg Deripaska’s Rusal, which holds 25 percent.

Norilsk fell 0.7 percent to 6,294 rubles at 1:38 p.m. in Moscow, while the 30-stock Micex Index rose 1.6 percent. Rusal advanced 1.7 percent to HK$7.13 in Hong Kong.

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