Basic Element to unite aluminum, energy and machine building enterprises

The formation of the largest financial and industrial holding Basic Elementwill be continued, the Nezavisimaya Gazeta newspaper reported. At thebeginning of this summer Oleg Deripaska declared that the formation mightbe over by the end of August, now he says that "it is rather hard to definethe final date of consolidation, due to difficulties with transferringassets". The chairman of the board of directors of Basic Element and thegeneral director of Russian Aluminum declared last Friday that Russiancompanies "had a trail of unsolved problems". Corporations in our country"have been formed badly", "theorists have elaborated on the correspondinglegislation badly", and it is aggravated by "limits". In particular, we "donot have rights of majority shareholders at all" and the transformation ofa company from a joint stock company to a company with limited liability ispractically impossible. Meanwhile, the consolidation of assets of BasicElement is expected to be finished by the end of the first quarter of 2003.This company is formed on the basis of the former investment and industrialgroup Sibal. It owns stakes in the Krasnoyarsk, Bratsk, Novokuznetsk,Sayansk aluminum works, the Samara metal works and a number of otherenterprises of the Russian aluminum industry. Moreover, RusPromAvto, whichis a part of the holding, consolidates assets of the Gorky and Uralautomobile manufacturing plants, the Bryansky Arsenal plant and some otherenterprises of the machine building industry. Basic Element has assets inthe energy, timber, food, textile industries and the insurance sector.According to Deripaska, one of the main means of uniting the holding'sassets is conversion to a single share. In particular, Russian Aluminumplans to convert to a single share by creating branches and affiliatecompanies on the basis of its 27 industrial centers. "It would be ideal toform one legal entity", the general director noted pointing out that ifseveral legal entities were formed, they w! ould 100 percent belong toRussian Aluminum. So, minority shareholders of aluminum plants will be ableto get shares in Russian Aluminum in any event. By the way, according toDeripaska, who owns a 50 percent block of shares in the company, about $1bnhave been spent within the framework of the consolidation of assets ofaluminum businesses..