Russia fails to sell stake in gold miner UGC as no one bids at auction
By Anastasia Lyrchikova
Failed Auction of Uzhuralzoloto (UGC) Stake
Background and Seizure of UGC Stake
MOSCOW, May 18 (Reuters) - The Russian state failed to auction a stake in gold producer Uzhuralzoloto (UGC) it had seized last year, a state auction website showed on Monday, saying that no one had submitted a bid.
A Russian court ruled last July that a majority stake in UGC, previously owned by businessman Konstantin Strukov, should be seized and transferred to the state, part of a wider pattern of nationalisations of assets of Russian companies.
Details of the Auction
Valuation and Stake Information
The federal property management agency Rosimushchestvo put up Strukov's assets for auction earlier this month, valuing them at 162.02 billion roubles ($2.22 billion). His former 67.2% stake in UGC - one of Russia's top 10 gold miners - was valued at 140.43 billion roubles.
On Monday, the state auction website said the planned sale had failed.
Reason for Auction Failure
"The bidding was declared invalid, as no applications for participation in the procedure were submitted at the end of the deadline for submitting applications," the website said.
Next Steps and Auction Process
Upcoming Dutch Auction
Rosimushchestvo said a new auction would begin on Tuesday, with the results to be announced on May 26.
It said this would be a Dutch auction, where the price is gradually lowered until someone places a bid. This could lead to the price of the UGC stake being reduced by up to 50% from the initial asking price, it said.
Context of Asset Seizures and Auctions
Legal and Financial Background
Prosecutors moved last year to seize the stake owned by Strukov after they accused him and several others of obtaining their property "through corruption." However, he is not in custody and has not been formally charged.
The Finance Ministry is putting up a number of confiscated assets for auction, hoping to replenish the federal treasury.
Previous Major Asset Sales
In January Russia managed to sell one of the country's largest and most modern airports, Moscow's Domodedovo, to a subsidiary of another airport in the capital, Sheremetyevo, for 66 billion roubles - just half of its starting price of 132.3 billion roubles.
Additional Information
($1 = 72.9000 roubles)
(Reporting by Anastasia Lyrchikova; Writing by Lucy Papachristou; Editing by Mark Trevelyan and Hugh Lawson)
