MOSCOW, December 16 (RIA Novosti) – Russian fertilizer producer Uralchem will use part of a $4.5 billion loan from VTB Capital to fund its purchase of 20 percent of potash giant Uralkali.
Uralchem announced that it had secured the seven-year loan Monday. It declared earlier this month that it planned to buy the $2.9 billion stake in Uralkali, Russia’s largest potash producer.
Potash is a primary ingredient in modern fertilizers and a critical resource for agriculture. The move is expected to ease tensions in the industry following a row over potash production between Russian and Belarusian companies this summer.
Uralkali’s CEO, Vladislav Baumgertner, was arrested in Belarus in August, a month after the company pulled out of a pricing cartel of potash producers that included Belaruskali, one of Belarus’ largest companies. The end of the cartel caused world potash prices – and Belarusian government revenues – to plummet.
Russia’s President Vladimir Putin met with his Belarusian counterpart Alexander Lukashenko to discuss the potash issue in September. Baumgertner was released to the authorities in Moscow last month on the condition that they pursue allegations against him that he caused financial damage to the two companies.
He is now under house arrest after being charged with abuse of office. Uralkali has denied any impropriety, and Baumgertner was re-elected to the company’s board of directors last month.
Uralchem’s CEO, Dmitry Mazepin, controls 95 percent of the company. The native of Minsk, Belarus, has a personal fortune of over $3 billion, according to Forbes, and serves as a United Russia regional deputy in the Russian region of Kirov.
Russian billionaire Mikhail Prokhorov bought a 21.6 percent stake in Uralkali last month from the company’s former largest shareholder, fellow billionaire Suleiman Kerimov.