Russian magnate dumps Magna shares to pay debt

Russia's wealthiest man has been forced to dump his 20 per cent stake in Magna International after creditors squeezed his own cash-strapped car-making subsidiary, Magna said Friday.

Oleg Deripaska, who is worth an estimated $26 billion US, gave the shares to an unnamed creditor after the company, reputed to be French bank BNP Paribas SA, started pressuring a subsidiary of Deripaska's Russian Machines in the wake of September's global financial meltdown.

The move knocked Magna's share price down $2.92 Cdn to a new 52-week low of $46.32 in TSX trading. The 52-week high of $96.21 was hit in October 2007.

The move effectively ends the one-year corporate marriage between parts maker Magna and Russia's second-largest car company, GAZ, a subsidiary of Russian Machines.  Deripaska, through his holding company, purchased the stake in Magna in September 2007 for $1.54 billion US.

For Magna, the partnership was a way into the growing Russian vehicle market, a place the Canadian company still believes can be lucrative.

"Our strategic alliance with Russian Machines has assisted us in accelerating our growth in the Russian market," said Siegfried Wolf, Magna's co-chief executive officer. 

"We believe that the Russian market still holds significant opportunities for us and intend to continue to pursue joint opportunities with Russian Machines and GAZ, as well as other opportunities to advance our position in Russia."

Deripaska has seen most of his financial holdings come under pressure in recent weeks.

Russia's stock market has fallen 30 per cent since July, partly as a result of recent aggressive moves by the government but also due to the drop in commodity prices.