Kazakhstan cancels KazakhGold stake sale to Polyus

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14:04 13.07.2010
text: Gazeta.kz
picture: vesti.kz
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"We welcome the readiness of the relevant Kazakhstan authorities and ministries to investigate the activities of former management," KazakhGold CEO and Polyus Gold General Director Evgeny Ivanov said in a statement.

Polyus, controlled by Russian billionaires Mikhail Prokhorov and Suleiman Kerimov, acquired a majority stake in KazakhGold last year [ID:nLH511382].

The Assaubayev family's Gold Lion Holdings was the main KazakhGold shareholder before Polyus, and they have strongly denied allegations that former management misappropriated funds or misstated results.

Shares of Polyus were down 1.02 percent at 1211 GMT, underperforming a firmer Russian index .MCX.

Analysts from VTB Capital said the latest action by Kazakh authorities creates uncertainty around the deal.

"Now, after so much work has been put in, we believe it is facing certain risks. In the longer term, it might undermine Polyus' plans to attract a global player through a merger or acquisition to develop its large reserve base," VTB said.

After acquiring KazakhGold, Polyus proposed earlier this year a reverse takeover transaction under which it would turn from parent into a subsidiary of KazakhGold.

A Russian government commission on foreign investments gave a green light to the reverse takeover in April. [ID:nLDE63C1A9]

The transaction, which would see a $307 million firm acquiring a parent company more than 30 times its size, was meant to create a $10.8 billion group that could have become the largest pure gold miner on the London Stock Exchange.

The two companies had planned to close the deal by August 10.

Source: Reuters.com