UPDATE: Deripaska Says Rusal, Norilsk Merger Not On The Cards

MOSCOW, Aug. 2 --A merger of Russian aluminum giant United Co. Rusal PLC (0486.HK) and OAO Norilsk Nickel (GMKN.RS) isn't on the cards, Oleg Deripaska, Rusal's major shareholder and chief executive said Friday.

Deripaska said Rusal--which owns a 25% stake in Norilsk--still wants to call an emergency general meeting of the world's largest nickel producer to debate the composition of the miner's board, and that preparation of legal documents
is behind the delay.

Rusal is embroiled in a hostile battle with Russian conglomerate Interros Group, which also owns a 25% stake in Norilsk, for control of the miner.

The aluminum producer is dissatisfied with the outcome of Norilsk's June 28 annual general meeting, where Rusal's board representation fell to three people from four, and chairman Alexander Voloshin--who Rusal supported--was ousted.

Both Interros and Norilsk have said there is no reason for the current board to step down or the AGM results to be reconsidered.

"We are preparing legal documents, lawsuits against Norilsk management, Norilsk registrar and Interros, to be filed both in Russia and abroad," Deripaska said.

He didn't say when the company plans to call the EGM.

Rusal said earlier that it would call for the EGM by July 20.

Interros said it wouldn't comment on "something which is not happening."

A Norilsk spokeswoman said the company "doesn't accept Rusal's criticism" and "is tired of commenting on the same groundless accusations."

Deripaska said Rusal may agree to reduce its representation on the board if the number of independent directors increases.

Rusal has three seats on the board, while Interros has four, and Norilsk management--which Rusal accuses of acting together with Interros--hold three seats.

Deripaska also repeated Rusal's criticism of Norilsk management, and called for their replacement.

"The company's current market capitalization is $32 billion, but it could be significantly more with a professional management," Deripaska said.

He said Rusal, as a shareholder, wants Norilsk to make its financials straightforward and sales and inter-company transactions more transparent.

Deripaska said Norilsk should sell its treasury shares, non-core assets and some overseas assets, which may "mobilize" up to $6 billion.

He said Rusal refused an offer made in March by Interros for a $2.8 billion buyback of Norilsk shares.

Rusal said it isn't in talks to sell its shares to another party or parties, but is ready to buy Norilsk shares from Interros.