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Norilsk as the Grand Prize of the Crisis

The greatest prize from the new “Shares for Loans” scandal looks to be Norilsk Nickel, as the Wall Street Journal reports on the creeping nationalization of one monster of a metals company.  Neither Potanin or Deripaska are willing to describe the state’s new role in their company as a nationalization, but that soon may change.

“The oligarchs have gotten a lot weaker and the state has gotten a lot stronger,” said a Moscow banker.

Norilsk’s two largest shareholders, billionaire businessmen Vladimir Potanin and Oleg Deripaska, said the financial crisis roiling Russia’s economy had forced them to end their battle for control and focus on rebuilding the company’s battered market capitalization.

Both had borrowed against their stakes in Norilsk, whose shares haveplunged 75% since January as metal prices have softened and the spatworsened. Mr. Deripaska’s debt-burdened UC Rusal had to turn to aRussian state bank to refinance its $4.5 billion loan last month,giving its Norilsk stake as collateral and agreeing to a larger staterole in the company.

“The crisis — that’s what forced us to get over our personalambitions,” Mr. Potanin, who owns slightly less than 30% of Norilsk,told reporters. He said the conflict was “played out” and that majordecisions would now be agreed to jointly.

At the dispute’s height, Mr. Deripaska sharply criticized the way inwhich the company was being run under Mr. Potanin’s influence. He triedunsuccessfully to block Mr. Strzhalkovsky’s nomination as CEO by Mr.Potanin. He also publicly urged stock-market regulators to investigatethe size of Mr. Potanin’s stake in Norilsk, suggesting it was largerthan declared.

On Tuesday, the two men offered a show of unity. Mr. Potanin playeddown the idea that the Kremlin had pressured them into the truce,saying government help in running Norilsk at a time of crisis was”justified.”

“The state didn’t interfere, but it was obvious that it wasirritated by our feud,” he said. Norilsk’s CEO, a KGB veteran likePrime Minister Vladimir Putin, had played “a significant role” ingetting the two men to sit down and talk, he added.