Deripaska’s aluminium smelter put up for a three-round auction: what price
17 July 2024 15:16
The State Property Fund has put up for privatisation the nationalised Zaporizhzhya aluminium smelter, which was previously owned by Russian oligarch Oleg Deripaska. This is reported by "Komersant Ukrainian" with reference to Prozorro.Sale.
A state-owned stake in Zaporizhzhya Aluminium Smelter in the amount of 607446012 shares, which is 97.5458% of the company’s authorised capital (including a 29.5363% state-owned stake in respect of which a court decision was made to impose sanctions in accordance with the Law of Ukraine “On Sanctions”), has been put up for auction.
The auction is scheduled for 6 August. Bids are currently being accepted.
The starting price of the plant is UAH 151 million 861 thousand 503.
What is a three-round English auction?
The bidders submit their closed bids before the auction starts. Potential buyers do not know whether there are any other competitors and do not see each other’s bids. The electronic auction system ranks the bids from lowest to highest, and the highest (closed) bidder has the right to make the last move in each round. This gives him the highest chance of winning.
The auction starts when at least two bidders have registered for the auction. However, in certain destinations, a lot can be bought by the only registered bidder at the price he or she offered. During three rounds, which last 3 minutes each, participants compete for the lot and raise their bids. When the auction ends, all information about the participants is disclosed.
The three-round English auction is the most common type of auction in the system, which can be used to sell or buy any asset, such as a wagon lease or a subsoil use permit.
What we know about Zaporizhzhia Aluminium Smelter
Zaporizhzhya Aluminium Smelter used to be the only primary aluminium producer in Ukraine.
However, in the 2000s, it was taken over by Russians, who significantly reduced the plant’s capacity. In 2001, the SPFU sold 68.01% of the plant’s shares to AvtoVAZ-Invest, which had to pay UAH 380 million and repay a debt of USD 75 million.
In 2007, ZALK came under the control of the united company RUSAL, owned by Russian billionaire Oleg Deripaska. The alumina shop was shut down in March 2009, the electrolysis shop in April 2011, and the foundry in July 2014. The company’s main sources of income were the lease of property, sale of assets and production stocks.
Deripaska purchased another 29.5% of the shares on the open market. Thus, the Russian ended up with 97.5% of Zaliznyk’s shares.
Due to the negative state of the company and RUSAL’s failure to fulfil its investment obligations, on 22 March 2012, the Kyiv Commercial Court ruled that 68% of Zalka shares owned by RUSAL be returned to Ukrainian state ownership. The same decision was made by the Kyiv Commercial Court of Appeal. However, RUSAL appealed the decision in cassation.
on 12 March 2015, the Supreme Court of Ukraine upheld the decision of the Higher Commercial Court to return 68.01% of Zalka shares to state ownership due to the failure of its owners to fulfil their investment obligations.
For 14 years, the Russians looted the plant and destroyed the unique primary aluminium production facility.
68.01% of the shares were recovered through the courts in 2012, while the rest were confiscated under sanctions against Deripaska.
In February 2023, the State Property Fund took over the management of the Zaporizhzhia plant’s shares, which the Russian oligarch was entitled to dispose of. Previously, the Fund already owned more than 68% of the company’s shares. So after the transfer, it now owns 97.5%.
Who is Deripaska?
Oleg Deripaska is a Russian oligarch, billionaire, owner of the Basic Element holding, head of Russian Aluminium, Siberian Aluminium, and the Sayanogorsk Aluminium Smelter. In 2008, his fortune was estimated at $28 billion, but in 2020 it was only $2.3 billion. Since April 2018, he has been under US sanctions, and since 2022, he has been under sanctions from other Western countries due to Russia’s invasion of Ukraine. In 2022, he called for peace and early peace talks with Ukraine.
Recently, Ukraine served a notice of suspicion to Russian oligarch Oleg Deripaska and detained two of his Ukrainian top managers who supplied Russia with raw materials for the production of Iskander ballistic missiles.
More than a year ago, Ukraine seized Deripaska’s property. The seized property includes 12 land plots, a seaport complex, apartments, administrative buildings, production workshops, 46 vehicles, and 240 pieces of specialised equipment.
