En+ Ready to Implement Sanctions Relief Plan as Deadline Looms

(Bloomberg) -- En+ Group Plc has asked for a temporary reprieve from U.S. sanctions by Aug. 5 as the final phase of its plan for billionaire Oleg Deripaska to relinquish control is “ready for implementation,” according to a filing from a lobbyist for the company.

The filing by Mercury LLC gives new detail on En+’s plans to persuade the U.S. Treasury to lift sanctions against the company and United Co. Rusal, which it controls. Without that relief, the lobbyist said En+ would have to consider a sale to China or nationalization, while the global aluminum market could see a repeat of the turmoil that followed the imposition of the sanctions in April. The Treasury’s Office of Foreign Assets Control, or OFAC, has given investors until Aug. 5 to sell their shares in En+ and Rusal.

Deripaska in April agreed to cut his stake in En+ to less than 50 percent and to appoint a majority of independent directors to the company’s board as part of a plan to persuade the U.S. to lift the sanctions. But three months after announcing the plan, the company has not publicly identified any potential independent directors, nor any buyer for Deripaska’s shares.

According to the filing to the U.S. Justice Department, which is dated July 12, the final phase of the so-called Barker plan, named for En+ Chairman Greg Barker, is ready to be implemented, but that would require the sanctions against the company to be lifted.

Barker Plan

“Lord Barker and En+ are requesting that OFAC de-list En+, perhaps through the creation of a provisional, time-limited authorization to allow for implementation of the final elements of the Barker Plan, on or before August 5,” according to the filing, which is titled “implementation update.”

The filing suggests En+ has identified potential new directors, referring to a “slate of independent board members submitted on July 5.”

It also suggests that Deripaska is planning to transfer shares to a trust in order to reduce his more than 66 percent stake to less than 50 percent. The final phase of the plan would include “engaging on the appointment of at least two proposed trustees to help ameliorate concerns regarding the dispensation of certain En+ shares,” according to the filing.

Bloomberg reported earlier this month that Deripaska was considering the option of a blind trust as he was dissatisfied with the market value of En+ after the shares plunged.

A spokeswoman for En+ had no immediate comment.

Bank Loan

Finally, as part of the plan, a loan from VTB Group would be “discharged,” according to the filing. The loan secured by En+ shares could be partially repaid from the proceeds of a sale of shares by Deripaska, according to a person familiar with the situation, who asked not be be named because the matter is private.

VTB also has a 9.6 percent equity stake in En+. The company’s sanctions relief plan involves those shares being voted by an independent person, according to the filing.

VTB’s press office declined to comment.

En+ also warned that any delay to lifting sanctions against the company and Rusal would be felt through the global aluminum industry. It said the company would be at a “crippling disadvantage” if it remained on the sanctions list through August, as various transactions and regulatory approvals would need to happen “within the August-September time frame.”

If the U.S. does not lift sanctions against it, En+ may look for “other avenues to resolve the current impasse,” including being acquired by “Chinese interests” or nationalized by Russia, according to the filing.

To contact the reporters on this story: Jack Farchy in London at jfarchy@bloomberg.net;Anna Baraulina in Moscow at abaraulina@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net, Dylan Griffiths, Torrey Clark

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