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RusAl Named in $2.8Bln Suit
BFI Group Divino has filed a lawsuit against Russian Aluminum, in which it is accusing of conspiring with Nigeria's president to acquire the government-owned Alscon smelter, undermining BFI's higher bid.
RusAl last month agreed to buy a majority stake in Nigeria's Alscon operation for $250 million. In a complaint filed in Manhattan federal court on March 16, Los Angeles-based BFI claims it topped RusAl with a bid of $410 million. BFI is suing the Russian firm for $2.8 billion.
Within hours after BFI was named the preferred bidder, "RusAl illicitly met with" Nigerian President Olusegun Obasanjo and began plotting to undo the deal, BFI says in the suit.
RusAl, controlled by billionaire Oleg Deripaska through his energy holding company En+, makes about one-eighth of the world's aluminum. It plans to invest $8 billion to boost annual production to 5 million tons of aluminum and 8 million tons of alumina, an intermediate product, by 2013. That would make RusAl the world's biggest aluminum producer. It's currently No. 3, behind Pittsburgh-based Alcoa and Montreal-based Alcan.
RusAl is buying 77.5 percent of Alscon from the Nigerian government. Nigeria and Germany's Ferrostal retain minority stakes, Moscow-based RusAl said in a statement on Feb. 3. The smelter may eventually produce as much as 150,000 tons of aluminum per year.
"We are aware that a suit has been lodged with the U.S. court," RusAl spokeswoman Vera Kurochkina said in a statement.
"The company is currently evaluating whether the service of procedure has been duly executed. Within a month, RusAl will formulate its position on the lack of jurisdiction in the U.S. over the lawsuit."
RusAl maintains an office in Mamaroneck, New York.
The Alscon smelter was put up for bid by the Nigerian government four years ago, according to BFI's complaint. At the time, BFI bid $410 million and RusAl bid $205 million, the suit says. RusAl ultimately raised its bid to $250 million.
Alcoa and other manufacturers reportedly dropped out of the bidding after learning that Ferrostal, which built the plant, would retain an ownership interest, the complaint says.
As part of the share purchase agreement, RusAl demanded from Nigeria's Bureau of Public Enterprises, or BPE, to open a London escrow account into which key foundation documents relating to the ownership of the smelter would be lodged, Nigeria's Daily Independent said earlier this month.
The documents include all legal title deeds, licenses, permits, land ownerships and Memorandum and Article of Association, the paper said.
"It is particularly curious that BPE is now accepting with glee the same demand it had earlier rejected, when BFIG asked that an escrow account be opened for it to pay in its $1 million bond, as a demonstration of its commitment to develop the plant in line with the reactivation plan it submitted," Rueben Jaja, BFI Group president, told the Daily Independent.
BFI, which is headed by Nigerian-American Jaja, according to the suit, describes itself as a group of companies that provide "capital resources, technology and infrastructure development services in the area of aluminum products, energy, hydrocarbons and steel."
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