On January 21 shareholders of KM Invest are to discuss the company's liquidation. They are also expected to vote on the charter of liquidation commission and appoint its members. Vedomosti's report stated that there are three candidates - Ekaterina Shakina, Onexim's employee (Prokhorov's representative), Andrey Klishas, Interros's General Director (Potanin's representative) and Rafael Akopov, General Director of KM Invest (independent candidate).
The liquidation was required by Mr. Potanin after the Board of Directors of KM Invest did not take into account his opinion and approved the sale of the company's assets worth over USD 8 bn. However, KM Invest is not able to sell assets. In December the Moscow Arbitration Court blocked the sale of the company's assets at Mr. Potanin's request. The BVI and Cyprus courts made the same decision not long ago. Therefore, the liquidation of KM Invest is the only way to divide the assets between Mr. Potanin and Mr. Prokhorov. All of the decisions on the sale of the assets are to be made by the liquidation commission by a unanimous vote. It would equalize the chances of Mr. Potanin and Mr. Prokhorov for the fair valuation of the assets sold.
We believe that the continuation of this conflict between Mr. Potanin and Mr. Prokhorov might further have negative implications for the companies' shares controlled by them. The major assets among them are Polyus Gold (RTS: PLZL) and Norilsk Nickel (RTS: GMKN).
However, we presently believe that shares in Norilsk Nickel are undervalued. The fair value of the company is around USD 309. This implies 27% upside to the current market price. We assign a BUY recommendation to the company's shares.
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