Russian automaker OAO GAZ said it was unable to confirm brash claims yesterday by OAO Siberian Aluminium (Sibal) that the metals group held a critical stake of 25% plus one share in the car and light-truck producer. GAZ, whose foreign partners include European Bank for Reconstruction and Development (EBRD) and Fiat Auto SpA, has faced mysterious takeover threats for months, rumoured throughout to have come from Sibal. The metals group had denied any interest in the automaker categorically and repeatedly - even days ago. But Sibal said it now aims to take "absolute control" of GAZ, Bloomberg reported yesterday.


"This is one hell of a poker game"
According to parties close to the automaker, Sibal is exaggerating its holding to intimidate minority stakeholders in GAZ to sell their shares cheaply in desperation to the metals group. "This is one hell of a poker game," one said. "They're bluffing."

The automaker has been cautious in its remarks during the confusing saga, but observers said GAZ fears it could fall precariously to Sibal within days.

"We do not have a lot of information about the situation," Oleg Vinogradov, advisor on economic and financial matters to GAZ President Nikolai Pugin, last night told just-auto.com. "We know we have a new shareholder. But we have no contacts with this company. We have no idea about its intentions."

Sibal has been accumulating GAZ shares through a series of murky transactions since August, exploiting the limited requirements for transparency in business deals in Russia, observers have said.

Consequently, no one can independently verify Sibal's claimed holdings, not even GAZ. The automaker has been able to estimate only that the stake is at least 10%, based on interpretations of documents filed with the registrar of GAZ's shares, Vinogradov said. "They may have more," he said. "But we have no evidence they do."


"no one can independently verify Sibal's claimed holdings, not even GAZ"
Prospects for Sibal to acquire over 50% of the automaker are disputed too. Some analysts believe enough stock has been available on the open market for the aluminium group to accumulate a controlling stake. But GAZ management has been fortifying a coalition of its owners to oppose Sibal.

"A group of shareholders that traditionally have supported current GAZ management now have more than 50%," Vinogradov said.

He declined to name any owners, but the largest is believed to be Avtobank with a 10.2% stake. Pugin chairs the bank's supervisory board, and the bank's biggest shareholder is an insurance concern whose chair also is GAZ's chair.

In the middle of the fray is EBRD, the automaker's biggest creditor. Following Russia's economic collapse in August 1998, GAZ defaulted last year on $80m in loans - $65m from EBRD, $15m from Avtobank. Talks underway to restructure the credit could involve the banks swapping the loans for GAZ equity. The exchange likely would result in EBRD becoming the automaker's largest shareholder with an estimated stake of 30%-40%.

But Sibal, whose name in Russian is Sibirsky Alyuminiy, seems keen to minimise EBRD's potential role with GAZ. In October, sources said, Sibal offered through a representative to buy the bank's loan. Recently, its officials visited EBRD at its headquarters in London, apparently to express opposition to any debt-equity swap.

EBRD has stressed it will not sell the debt, proclaiming allegiance to GAZ's management. The bank declined to comment yesterday on reports of Sibal taking a stake in the automaker.

If Sibal owns over 25% of GAZ, it would control enough stock to veto strategic votes at shareholder meetings, including decisions over debt-equity swaps with EBRD and Avtobank.

GAZ, whose name in Russian is Gorkovsky Avtomobilny Zavod, is the second-largest producer of vehicles in the ex-USSR, behind Lada-maker AO AvtoVAZ. It is based 400km east of Moscow in Nizhny Novgorod, Russia's third-largest city (re-named Gorky 1932-1991).

Read a feature about takeover threats to GAZ here.


Contact Ryan James Tutak, associate editor of just-auto.com for Eastern Europe:
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