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US to lift sanctions from En+, Rusal following significant restructuring


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US to lift sanctions from En+, Rusal following significant restructuring

The U.S. Treasury Department's Office of Foreign Assets Control intends to lift previously imposed sanctions on En+ Group PLC, United Co. Rusal PLC, and En+ unit JSC EuroSibEnergo within 30 days.

Rusal shares were up almost 14% by noon on the Hong Kong Stock Exchange on Dec. 20.

Russian oligarch Oleg Deripaska, who owns major stakes in the companies, will remain sanctioned, including all properties in which he owns an over a 50% stake.

The three companies have agreed to significant restructuring and corporate governance changes to address the circumstances that led to the sanctions.

"[The Office of Foreign Assets Control, or OFAC] has determined that the significant restructuring and corporate governance changes will enable them to meet the criteria for delisting," the agency said Dec. 19.

As part of the restructuring, the companies will reduce Deripaska's direct and indirect shareholding stake, overhaul the boards of En+ and Rusal, take restrictive steps related to their corporate governance, and conduct extensive, ongoing auditing, certification and reporting requirements.

The framework will become a binding agreement between the companies and OFAC.

Treasury Secretary Steven Mnuchin noted that the companies were sanctioned due to their links with Deripaska rather than their own conduct, and the sanctions will be lifted as "these companies have committed to significantly diminish Deripaska's ownership and sever his control."

"The companies will be subject to ongoing compliance and will face severe consequences if they fail to comply," Mnuchin added.

En+, Rusal and EuroSibEnergo were added in early April to a list of Russian companies and individuals sanctioned by the U.S. Treasury Department for profiting from Russia's "malign activity around the globe."

"Deripaska's investment in these companies is effectively frozen and Deripaska cannot obtain cash either in return for his shares or from future dividends issued by En+, Rusal, or [EuroSibEnergo]," OFAC said.

Anyone who conducts a significant transaction on behalf of Deripaska will be subject to secondary sanctions, OFAC added.