A labyrinthine dispute over a company with vast gold-mining assets in Kazakhstan, which had tarnished the country's investment image and pitted a couple of powerful Russian oligarchs against a rich and influential Kazakh family, has finally been settled. The Kazakh family has outshone Russia’s big businessmen, taking back a company it sold to them before having second thoughts.
According to a statement by Russia's Polyus Gold, the Asaubayev family is retaking control of KazakhAltyn, the main operating subsidiary of the KazakhGold firm once owned by the family but snapped up by the Russian gold giant in 2009. Russian oligarchs Mikhail Prokhorov and Suleyman Kerimov took over KazakhGold through Polyus Gold’s acquisition of a 50.1 percent controlling stake in KazakhAltyn. They later increased their share to 65 percent, while the Asaubayevs retained an 8.8 percent interest.
The two companies then planned to carry out a reverse takeover, with London-listed KazakhGold swallowing up Polyus Gold in a deal set to create the largest gold company in the CIS – and get Polyus Gold onto the London Stock Exchange.
Before that could happen the deal went sour, however, generating a stream of lawsuits and a fierce war of words between KazakhAltyn's old Kazakh owners and the new Russian ones.
This June Polyus Gold started suing five former KazakhGold directors -- all members of the Asaubayev family -- at the London High Court, alleging that they’d made false claims about gold extraction in Kazakhstan. The Asaubayevs vigorously denied the accusations, and came up with an asymmetric response: Back in Kazakhstan, the government unexpectedly revoked its approval for the reverse takeover in a move market watchers linked to the well-connected family's lobbying. To compound the new Russian owners’ difficulties, a fraud case was launched in Kazakhstan against three members of KazakhGold’s board.
After months of wrangling, the two companies have finally reached a deal: Polyus Gold is dropping all lawsuits against the Asaubayevs and has agreed to sell KazakhGold production assets back to the family in a deal worth $509 million, while the Kazakh government will reinstate its approval for the reverse takeover.
The Asaubayevs will pay $331 million for a 65 percent stake in KazakhAltyn (along with assets in Romania and Kyrgyzstan) by March 11, and the deal will be cemented with a convoluted agreement on outstanding debts.
The glittering prize is back in the hands of the Kazakhs.
Aydar Asaubayev told the KazTAG news agency that the family is pretty happy with the deal, “since the price of the assets is very advantageous at today’s gold price.”
Joanna Lillis is a journalist based in Almaty and author of Dark Shadows: Inside the Secret World of Kazakhstan.
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