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Russian tycoon's automaker in talks with U.S. to get sanctions lifted - sources

Published 20/12/2018, 16:11
© Reuters.  Russian tycoon's automaker in talks with U.S. to get sanctions lifted - sources
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By Katya Golubkova and Gleb Stolyarov

MOSCOW (Reuters) - Oleg Deripaska's team, which secured the lifting of U.S. sanctions on the Russian tycoon's aluminium and energy businesses, is also working to get them removed from his automaker GAZ (MM:GAZA), five sources close to the talks said.

The U.S. Treasury on Wednesday said it would lift sanctions on Deripaska's core empire, aluminium giant Rusal (HK:0486) and its parent En+ , watering down the toughest penalties imposed since Moscow's 2014 annexation of Crimea. The deal is subject to a 30-day review period.

The U.S. Treasury had imposed sanctions on Deripaska, Rusal, En+, GAZ and other companies in which he owns major stakes in April, citing "malign activities" by Russia.

On Wednesday, it said Rusal, En+ and power firm EuroSibEnergo had agreed to restructure to reduce Deripaska's stakes, adding if Congress does not object the Office of Foreign Assets Control (OFAC) would lift the sanctions in one month.

But there was no mention of GAZ, Russia's largest producer of light commercial vehicles (LCV), leaving market players guessing over its fate.

"Talks (with OFAC over GAZ) are continuing, they are separate from talks on other Deripaska's companies as this (cars) is a different market and other players are interested in sanctions being removed," one of the sources said.

GAZ exports vehicles to over 25 countries outside Russia, and at home, its stake at the LCV market is around 50 percent.

GAZ has a contract manufacturing relationship with Germany's Daimler (DE:DAIGn) on LCV production in Russia and Volkswagen (DE:VOWG_p) uses GAZ facilities to produce some passenger car models in Russia.

A second source familiar with the talks said the main focus on getting sanctions lifted on GAZ was for it to mirror the shareholder changes which En+ had committed to undergo.

Under the deal with OFAC, Deripaska's stake in En+ will fall below 50 percent from 70 percent, with limited voting rights.

Two other sources familiar with the talks said the process may lead to GAZ selling some of its assets or a stake in itself, depending on how talks develop with the U.S. Treasury.

The White House referred a Reuters request for comment on GAZ to the U.S. Treasury. The U.S. Treasury was not immediately available for comment. GAZ and Daimler declined to comment.

Volkswagen said it was following developments closely.

"Volkswagen is in constant contact with the relevant departments for this purpose. It is crucial that we remain in a dialogue and do not slacken in our efforts to find a solution. In principle, Volkswagen AG complies with all existing sanctions," it said.

A representative for Deripaska did not reply to a request for a comment.

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