Private Equity Execs Picked to Oversee Deripaska's En+ Stake
(Bloomberg) -- The U.S. Treasury Department has chosen David Knower of Cerberus Capital Management and two other Americans to oversee shares of En+ Group Plc that Russian billionaire Oleg Deripaska will relinquish as part of a deal to remove sanctions on the company.
Deripaska controls United Co. Rusal, the world’s second-largest aluminum supplier, through the London-listed En+.
The Treasury Department’s Office of Foreign Assets Control has vetted trustees that will oversee shares Deripaska will relinquish to Russia’s VTB Bank, as well as those already held by the tycoon’s ex-wife and his former father-in-law, according to a person familiar with deliberations. The person asked not to be identified because the arrangement hasn’t been announced.
David Crane, senior operating executive at Pegasus Capital Advisors and D.J. Baker, a corporate lawyer who previously was a global chair of corporate restructuring at Latham & Watkins LLC, will also serve as trustees. OFAC is convinced all three will ensure that U.S. interests are protected and that Deripaska won’t be able to exercise voting control of the company, according to the person.
Knower, Crane and Baker may exercise the voting rights attached to certain shares of the company as required by OFAC, En+ said in a statement on Friday.
Treasury is expected to formally remove sanctions on En+, Rusal and a third company, EuroSibEnergo JSC, as soon as the end of January. It has extended licenses for the firms to operate under sanctions until Jan. 28 in order to allow time to “execute technical steps that must be taken prior to the completion of the agreement” with OFAC, Treasury said in a statement late Wednesday.
The department on Dec. 19 said it planned to lift sanctions on the three companies. Deripaska was sanctioned in April for his ties to Russian President Vladimir Putin, who the U.S. sought to punish for interference in the 2016 presidential elections. Deripaska himself will remain under sanctions.
Treasury Secretary Steven Mnuchin has said that the companies weren’t targeted by the U.S., but wound up sanctioned because of their links to Deripaska.
Deripaska since April has negotiated with Treasury to remove sanctions on En+ and Rusal. Aluminum markets descended into chaos after the U.S. sanctioned Rusal, with investors and suppliers concerned about supply, plant closures and work-force reductions.
The deal struck with Treasury requires Deripaska to cut his direct and indirect ownership below 50 percent each in En+ and Rusal, overhaul the companies’ boards, and commit “to full transparency with Treasury by undertaking extensive, ongoing auditing, certification, and reporting requirements,” the department said last month.
Deripaska’s stake in EN+ will fall from approximately 70 percent to 44.95 percent. VTB and other entities approved by Treasury will take ownership of a block of shares in EN+ as collateral for previous obligations companies controlled by the billionaire have to the bank. Deripaska also will donate a block of shares to a charitable foundation.
©2019 Bloomberg L.P.