Russia: Government Wants Control of Alrosa by November

The Kremlin wants to complete its takeover of Alrosa by November, sources in Russia say. The government plans to sell the company some assets in return for shares that, together with a bank’s stake, will bring it to its goal of 50 percent plus one share.

According to sources quoted by Interfax, the issue will be discussed at Alrosa's supervisory board meeting in September.

Currently, the Russian Property Agency owns 37 percent of Alrosa. VTB, Russia's second largest bank, owns 10.5 percent, which is expected to be sold to the government, bringing it 2.5 percent shy of a 50 percent holding.

To gap that difference, a deal that could be in the works involves handing over certain assets in return for shares.

“As a result of the transaction, which is under preparation now, the state will receive a block of shares in Alrosa, Alrosa will receive title to assets and VTB will receive the cash equivalent of shares,” said Russian Finance Minister and Alrosa supervisory board chairman Alexei Kudrin, quoted by Interfax.

“The shares [on VTB's balance sheet] will indeed be owned by the Russian Federation, as the result of the corresponding transactions, and, pursuant to a court ruling, most of the assets have passed to the Russian Federation's ownership. The Russian Federation will increase its block of shares, after exchanging [the assets] for shares," Kudrin added.

The Republic of Yakutia, through its Property Ministry, owns 32 percent of Alrosa; eight districts in Yakutia own another eight percent. The rest is held by company employees and unions.