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Corus spurns Usmanov bid to appoint director.

Byline: By Iain Laing

Steelmaker Corus yesterday stated its opposition to plans by Russian stakeholder Alisher Usmanov to get a place on its board.

The loss-making company said that plans by the metals magnate from the Urals to nominate a former executive of Dutch steelmaker Hoogovens as a director were "a distraction" to its review of the business.

Corus was formed from the merger of Hoogovens and British Steel in 1999.Relations between the profitable Dutch and the loss-making British businesses have been strained ever since and the UK operation has borne the brunt of 13,000 job cuts made since 1999.

The company, which employs 2,800 staff on Teesside, said it was discussing possible commercial deals with Usmanov, a 13.4pc shareholder, but declined to give details.

The exact reasons for his interest may become clearer ahead of Thursday's annual meeting of Corus, although so far there has been no direct comment from Mr Usmanov, who controls iron and steel plants in Russia's Ural mountains. Analysts are not expecting a full-blown takeover approach from Usmanov, so the strongest prospect is the forging of trading links with his Russian interests, particularly in the supply of iron ore. Other attractions could include the company's Teesside mill, which currently faces an uncertain future.

The iron and steel tycoon is reportedly interested in supplying Corus with raw materials and unfinished slab steel from his chain of businesses in the Ural mountains.

Russian imports to the EU are subject to quota restrictions but Mr Usmanov may be able to bypass restrictions with an increased stake in Corus. Such a move could hit the Teesside operation, which is being turned into a stand-alone producer of unfinished slab steel.

Mr Usmanov is unlikely to go quietly as he has pledged to continue building up his stake until Corus is properly restructured. He is currently the second largest shareholder behind US investment firm Brandes.

Whatever his interest, Mr Usmanov has built up his stake at the right time as rising steel prices and cost-cutting measures have lifted the company's prospects and driven the share price from 8p to 41p in the past year.

Management yesterday stressed the importance of maintaining continuity during its battle to return to the black.
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Publication:The Journal (Newcastle, England)
Date:Apr 17, 2004
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