Bloomberg cited Mr Vladimir Putin PM of Russian as saying that Russian metals companies should only merge with rivals to enhance competitiveness and not simply to consolidate debt.
He said that “It does not take a lot of brains simply to unify debts with debts. If we combine two poor people, the family will not become richer.”
He added that billionaires Mr Oleg Deripaska and Mr Vladimir Potanin last week put forward a plan to merge Moscow based OAO GMK Norilsk Nickel with five other metals producers to create the world’s second largest mining company.
Mr Putin said that “They proposed the government swap debt for 25% of the new company. The state hasn’t decided whether to support the plan. We will take a very balanced approach.”
Mr Putin said that “When there’s some positive synergy for the merger with mineral resources from one side and financial opportunities from the other and a sales market on another, then of course it is needed.”
He said that he supports the long overdue consolidation of the country’s banking industry. He said that “If you look at the number of banks in Russia and the number of banks in a developed economy, there are just too many of them.
According to central bank data, the government handed out more than USD 13.5 billion in bailouts to Russian companies since October after commodity and stock prices plunged. Russian companies are due to repay USD 110 billion of foreign obligations this year, more than double the total owed in Brazil, India and China.
Mr Deripaska and Mr Potanin the two biggest shareholders in Norilsk, proposed a combination with state owned titanium maker OAO VSMPO Avisma, which is based in the Urals Mountains city of Verkhnaya Salda, iron ore producer OAO Metalloinvest, Berezniki based potash miner OAO Uralkali and steelmakers Evraz Group SA and Moscow based OAO Mechel.
According to Interros Holdings Company, the new company would have debts as much as USD 28 billion, sales of USD 60 billion and a market capitalization of as much as USD 100 billion.
(Sourced from Bloomberg)
