Kerimov reportedly set to sell stake in Russia's Uralkali

By bne IntelliNews September 10, 2013

bne -

Suleiman Kerimov is close to selling his 21% stake in Russia's biggest potash producer Uralkali, reports claimed on September 9. While a spokesperson for the oligarch flatly denied the story, the company saw its share price jump, as investors eyed a resolution to the conflict with Belarus in which it has been enveloped.

An unnamed Uralkali source told Prime, "there have been no negotiations". However, they admitted Kerimov has received several unsolicited proposals to sell the asset.

Industry insiders tell bne it's unclear what is happening with Kerimov's stake. The oligarch and politician is heavily in debt and is believed to have pledged the shares against loans. At the same time there have been several suspicious transactions with UralKali's shares in recent months.

Those deals came ahead of a sudden end to an eight-year sales partnership with Belaruskali last month, which sent shock waves through the industry. Uralkali's share price dropped 20% on the move - which came at the end of a year of worsening relations - as it opened the global potash market to fuller competition. Global peers also saw their stocks drop sharply as the move cancelled an agreement by Uralkali and its Belarusian peer to sell exclusively through the Belarusian Potash Company (BPC).

That has sparked a crisis in relations between Moscow and Minsk - for whom Belaruskali is a crown jewel which pulls in a huge chunk of hard currency earnings. Last month, Belarus arrested Uralkali CEO Vladislav Baumgertner, and is seeking the extradition of Kerimov on criminal charges that carry a jail sentence of up to 10 years.

bne sources claim someone was shorting UralKali shares - and those of other potash producers - to the tune of $500m in July, followed by another $2bn bet on falling share prices amongst potash producers just before the news of the break up of BPC hit. Someone made a lot of money from the break up of the Uralkali-Belaruskali partnership. Some analysts speculate it was Kerimov himself, as he sought cash to hold off creditors. However, there is no evidence to support that claim.

Still, German authorities are now reported to be on the case, and are set to carry out an audit to detect possible market manipulations and insider deals concerning potash shares, reports Belarusian state news agency Belta. Germany's federal agency for the supervision of the financial sector is said to be looking at the circumstances surrounding the drastic fall in the share price of German concern K+S. A chunk of K+S belongs to Andrei Melnichenko, majority owner of Eurochem, which is the second biggest potash producer in Russia.

While the reports of Kerimov's hunt for a buyer should be taken with a pinch of salt, the Kremlin has form in exhibiting an interest in ownership of Uralkali. Previous majority shareholder Dmitry Rybolovlev, who ran the company for some 15 years, was pressured to sell a few years ago; part of Moscow's long held ambition to buy out Belaruskali and add it to the Russian portfolio - which would hand it control of a huge chunk of the global industry.

Kommersant reports that Vladimir Evtushenkov, who controls the AFK Sistema conglomerate, is one of three potential bidders for Kerimov's stake, which is worth around $3bn. "I read all this too," Evtushenkov told Reuters. "There is nothing behind this". Mikhail Gutseriev, a founder of oil firm Russneft, and former banker Vladimir Kogan were also listed as potential suitors.

The Russian-language edition of Forbes magazine carried a similar report, leading Uralkali shares to jump 7.5% in early trading in Moscow to their highest in six weeks. Perhaps the same mysterious speculator just made another bundle of money.

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