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Uralkali Shares Gain on China Bond-for-Stake Swap: Moscow Mover

OAO Uralkali climbed for the first day in six after a unit of China’s sovereign wealth fund exchanged bonds it holds in the world’s biggest potash producer for a 12.5 percent stake.

Uralkali increased as much as 3.9 percent and closed up 0.5 percent at 171 rubles in Moscow. The amount of shares traded was equivalent to about 99 percent of the three-month average.

Chengdong Investment Corp., a unit of China Investment Corp., or CIC, bought the bonds in November from Wadge Holdings, owned by billionaires Suleiman Kerimov, Filaret Galchev, Anatoly Skurov. Chengdong Investment notified Uralkali today that it had converted the bonds into shares, the potash producer said in a statement. China imports about a fifth of global potash shipments, valued at about $20 billion, using it to enhance crops that feed the most-populous nation.

“The Chinese have been interested in increasing their position in the potash industry for a long time,” Oleg Petropavlovskiy, an analyst at BCS Financial Group, said by phone from Moscow. “I’d estimate the Chinese had to pay a 60 percent premium to the current share price for the conversion.”

Kerimov, Galchev and Skurov retain a combined 33 percent stake in Uralkali. They are said to have received offers to sell out of the Berezniki, Russia-based company after it quit a trading venture with Belarus in July and its Chief Executive Officer Vladislav Baumgertner was arrested in Minsk in August.

Vladimir Kogan, an ally of President Vladimir Putin, is a leading bidder for control of Uralkali, people familiar with the situation said on Sept. 13.

The agreement to convert bonds is between China and the company’s shareholders and Uralkali isn’t involved in the transaction, its press service said. CIC’s press-office didn’t return calls seeking comments.

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