The future of OAO Uralkali’s marketing partnership with Belarus will depend on the Russian potash producer’s management, according to the head of OAO Uralchem, which is buying a 20 percent stake in the company.
“Should Uralkali management find a way to make such a partnership mutually beneficial, we wouldn’t oppose such an arrangement,” Uralchem Chief Executive Officer Dmitry Konyaev told reporters today in Moscow.
Uralkali roiled the $20 billion potash market at the end of July, sparking a dispute with Belarus by quitting a venture that controlled more than 40 percent of global exports. Belarus arrested Uralkali Chief Executive Officer Vladislav Baumgertner in August, and the country’s president, Aleksandr Lukashenko, called for a change of ownership at the Russian company before considering a return to their joint trader.
Uralchem, the fertilizer maker controlled by Belarus-born billionaire Dmitry Mazepin plans to buy 20 percent of Uralkali, while billionaire Mikhail Prokhorov’s Onexim Group agreed to buy 21.75 percent of the company from owner Suleiman Kerimov. They’ll be able to wield a majority at Uralkali with their combined stakes and the right to vote a 12 percent stake that is held by a unit of the Berezniki, Russia-based mining company.
“We are different investors from Onexim,” Konyaev said. Uralchem has no plans to sign a shareholder agreement with Onexim on joint management and will exercise influence at Uralkali through board participation, he said.
Baumgertner was extradited to Russia last month and is still being held in a Moscow jail. Belarus demanded Russia open a case against Baumgertner before agreeing to hand him over.
While there have been no discussions about replacing Baumgertner, once Uralchem has representatives on Uralkali’s board, it will “be active on this issue,” Konyaev said, declining to say whether the new investor will seek his resignation. “It’s not good for Uralkali to have a CEO not managing the company and in prison.”
Uralchem will buy the Uralkali stake at a premium to the market price, using a loan from one of the largest Russian banks backed by its own stock and share in the potash producer, Konyaev said, declining to elaborate on the price. The deal is close to completion, he said.
The 20 percent stake had a value of about $3 billion based on the market price on Dec. 2, the day of the announcement.
Mazepin’s Uralchem is buying the holdings of billionaires Anatoly Skurov and Filaret Galchev, who control about 12 percent in the company. The remaining stake of about 8 percent will come from investment companies that bought out minority shareholders, Konyaev said. The shares were held by other partners of Kerimov, each of whom hold less than 5 percent, meaning they don’t have to disclose their holdings, people said last week, asking not to be identified because the information isn’t public.
Mazepin, 45, owns 95.2 percent of Uralchem, a phosphate and nitrogen fertilizer producer. His company has four production facilities, including one in Uralkali’s base of Berezniki, in Russia’s Perm region.
Uralchem isn’t considering a merger with Uralkali, Konyaev said. Andrey Belyak, spokesman at Onexim, declined to comment.