Roman Abramovich fails to sell £1 billion shares in Russian Mining company due to misinterpretation of a Shareholders’ Agreement

Friday, October 12th, 2018

The High Court has ruled that Crispian Investments Limited (“Crispian”), a company ultimately owned by Roman Abramovich and Alexander Abramov jointly, was precluded from selling its shares in Russian nickel mining giant Nornickel as Crispian had not validly commenced the “right of first refusal” procedure contained in the shareholders agreement of Nornickel (the “Shareholders Agreement”).

The Facts
The three major shareholders in Nornickel were Crispian, Whiteleave Holdings Limited (a company ultimately owned by Vladimir Potanin) (“Whiteleave”) and United Company Rusal PLC (“Rusal”). The Shareholders Agreement specified that if Crispian sells its shares in Nornickel, Rusal and Whiteleave shall have a right of first refusal in respect of the shares. The Shareholders Agreement further stipulated that if Rusal and Whiteleave exercised their right of first refusal, the price they would pay Crispian for the shares would be “equal to the price proposed by a bona-fide third party purchaser”.

The Court heard that in February 2018, Mr Abramovich and Mr Potanin reached an agreement that a subsidiary of Whiteleave, Bornico Holdings Co. Limited (“Bornico”) would purchase Crispian’s shares in Nornickel for US$1.477 billion. In order to comply with the right of first refusal provisions in the Shareholders Agreement, Crispian subsequently served a notice on Whiteleave and Rusal offering them both the right to buy Crispian’s shares for $1.477 billion (the price Bornico had offered).
Rusal commenced proceedings against Crispian and Whiteleave on the basis that (among other things) Bornico was not a “bona-fide third party purchaser” within the meaning of the Shareholders Agreement, as Bornico was affiliated with Whiteleave and therefore Crispian had not effectively commenced the right of first refusal procedure.
Significantly, it emerged during proceedings that the offer from Bornico was not a standalone offer but was made pursuant to a scheme agreed between Mr Abramovich and Mr Potanin. It was revealed that Bornico’s offer for Crispian’s shares included a $200 million premium, the intention of which was to put Rusal off from exercising its right of first refusal. Mr Potanin would be compensated for paying the $200 million premium in subsequent transactions with Mr Abramovich, including the transfer of Aristus Holdings Ltd (a company with the rights to explore and extract the Baimskoye Deposits) from Mr Abramovich to Mr Potanin.

Crispian and Whiteleave argued that the Shareholders Agreement’s reference to a bona-fide third party purchaser meant that the purchaser could not be a party related to Crispian but did not include parties related to Whiteleave (such as Bornico).

The Decision
The Court rejected Crispian and Whiteleave’s defence, finding that, as a matter of true and proper interpretation of the Shareholders Agreement, Bornico was not a bona-fide third party purchaser and, therefore, the right of first refusal procedure had not been validly commenced by Crispian.
The Court went on to say that, even if Bornico were deemed to be a bona-fide third party purchaser, the price offered by Bornico was not a price offered by a “bona fide third party purchaser” because the price was not agreed on an arm’s length basis but was conditional on or related to other agreements or understandings between Mr Abramovich and Mr Potanin.

The ruling in this case should offer comfort to shareholders in that, if you have a shareholders’ agreement that clearly sets out the terms agreed between the parties, the courts will endeavour to interpret the agreement in accordance with the clear intentions of the parties and also seek to limit the schemes parties may devise to circumvent the terms of the agreement.

About the Author
Alex O’Leary is an associate in the Corporate and Commercial department at Hanne & Co. Alex is also an Oratto member lawyer (
If you require legal advice on the matters contemplated by this article, please contact Alex on 0207 228 0017 or