On December 19, Onexim Group sent an offer to Mr. Potanin saying that it is ready to sell its 50% stake in KM Invest or buy his stake. In addition, yesterday Onexim demanded to call a meeting of shareholders to approve the liquidation of KM Invest. This happened after yesterday's BoD meeting. At this meeting, representatives of Mr. Potatnin's Interros approved, without the agreement of Onexim, the sale by KM Invest of its 2% stake in Norilsk Nickel, a 7% stake in Polyus Gold as well as buying some other assets from its subsidiaries. Mr. Prokhorov said that these transactions are non-transparent and insisted on the liquidation of the jointly owned company. The offer provides Mr. Potanin with these options, Onexim's General Director, Dmitry Razumov, said.
The media reported that Mr. Prokhorov's offer valued all KM Invest assets and liabilities at USD 14.766 bn and his 50% stake at USD 7.383 bn. Mr. Potanin has one month to accept the offer and 90 days to finalize the transaction. If Mr. Potanin agrees to buy his partner's share in KM Invest, Mr. Prokhorov reserves the right to buy the half of his stakes in Open Investments, Soglasie insurance company, Rosbank, Roza Hutor, Rusia Petroleum, Interros Estate and 4% stakes in Nornikel and Polyus Gold. Mr. Prokhorov values these assets at USD 5.2 bn. That means that the amount Mr. Potanin would have to pay to buyout KM Invest stake would be reduced to USD 2.2 bn. If Mr. Potanin refuses to buy the stake in KM Invest, Mr. Prokhorov is ready to grant him a right to buyout the stakes in the assets he is interested in.
Interros also does not object to an economic liquidation. Mr. Razumov said, that yesterday another meeting of the BoD of KM Invest was scheduled for December 26. It is planned to approve the sale of all the company's assets at this meeting. A representative of KM Invest confirmed this information. But Onexim fears that these transactions might be non-transparent. KM Invest's budget which would have all of the details about the timeframes and the asset selling prices has not been approved. Therefore, Onexim is not sure that the assets of the group might not, for example, be sold to Mr. Potanin or a third party at non-market terms. In addition, there is no guarantee that the revenue from the sale of the assets would be distributed among shareholders, despite assurances of KM Invest General Director, Rafael Akopov, that the assets are to be sold at market prices and in the interests of both owners.
Mr. Prokhorov values 8.1% stake in Norilsk Nickel at USD 3.88 bn or USD 251 per share. This valuation is slightly lower than the current market price. That is why we recommend to investors to use this number as a benchmark in the short term. However, based on our estimates, the fair value of Norilsk Nickel is USD 309 in the long term.
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