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Russia: Privatization Of Norilsk Nickel Fuels Competition

Moscow, 18 July 1997 (RFE/RL) - A tender for 38 percent of the shares in Russia's Norilsk Nickel is set for July 22 and the contest already is generating intense heat. Most of that is aimed at the front-runner, and Norilsk's current controller, Uneximbank (unrelated to Eximbank).

The tender is being held to complete privatization of 47.9 million shares in the company, Russia's dominant producer of nickel, platinum group metals, cobalt, and copper.

Norilsk Nickel shares currently are being quoted on the Moscow stock market at the equivalent of $13.30, close to the year's high. They were $4.90 at one point since January. The Moscow-based Skate ratings agency recently rated Norilsk shares at the speculative B-minus level. The State Property Fund has set the ase price for the tender at $369 million, which represents a share price equivalent to $7.70. A bid equal to the current market price for Norilsk Nickel shares would be $637 million - almost double the minimum.

Speculation in the Russian press is that the tender price for the shares will be too high for Uneximbank to afford. The institution paid just $170.1 million for its 38 percent bloc in the original loans-for-shares transfer in 1995.

Norilsk management has been under constant attack this year. In February, the State Duma ordered an Accounting Chamber audit of the management's financial operations, and an assessment of Uneximbank's role. The Duma also recommended deferring any sale of the state's shares until January 1, 2000. In March the Norilsk workers' union threatened to strike over a list of labor demands, including payment of delayed wages equivalent to $158 million, and the firing of two management executives. A 1996 tax relief deal unraveled, and tax police seized shipments of metal at dockside.

In recent weeks, the company has been hit by a reduction of gas supply in a claim for unpaid energy bills and local taxes.

Norilsk Nickel spokesman, Anatoly Komrakov, said this week that a consolidated statement of the company's debts and obligations has been agreed with the deputy prime minister in charge of privatization, Alfred Kokh. Komrakov said that the tender conditions require, in addition to a share price offer, commitment to invest $300 million in the company.