ZURICH (Thomson Financial) - Russia has threatened to cool relations with Swiss companies, taking the ongoing takeover battle between Russian investor Viktor Vekselberg and Swiss engineering group Sulzer AG to a political level, Swiss newspaper SonntagsZeitung reported.

The newspaper said the Swiss economy ministry confirmed that it received a letter from former Russian Economy Minister German Gref warning of measures if Vekselberg is not granted the voting rights his 32 pct stake in the group entitles him to.

'Unfortunately the situation is sending a negative signal to the Russian economy and might undermine the Russian state's efforts to support foreign high-tech firms in their presence and expansion in Russia,' the newspaper quoted the letter as saying.

The paper also said that Swiss authorities had already responded to the letter, saying they were 'confident that all outstanding questions will be resolved.'

Thus far, Sulzer chairman Ulf Berg has denied Vekselberg the right to register his shares in the company's register, effectively preventing him from exercising his voting rights and taking control over the firm.

In its most recent statement, Sulzer said it had still not registered the stake due to lack of information but that the two sides were 'in constructive discussions.'

In April this year, Vekselberg's Renova Group secretly built up its stake in Sulzer together with Austrian Victory Industriebeteiligungs Gesellschaft via investment vehicle Everest Beteiligungs GmbH sparking a debate about Swiss reporting requirements and leading to legal reforms aimed improving investor transparency.

Last month, Vekselberg took full control of the stake, clearing up concerns over the ownership structure of the stake, which Sulzer cited as a key argument for denying the registry.

SonntagsZeitung reported that according to legal experts, Sulzer had now little ground to prevent Vekselberg from registering his shares.

Meanwhile, a spokesman for Vekselberg told Swiss Sunday paper NZZ am Sonntag, that the group will currently not disclose whether it plans to take Sulzer to court.

Vekselberg and Victory's Ronny Pecik and Georg Stumpf remain under investigation from the Swiss banking commission EBK, which is set to rule whether they violated reporting requirements when building up their Sulzer stake later this year.

A Russian response to Switzerland's response remains outstanding, after

former Russian Economy Minister German Gref was replaced by Elvira Nabiullina earlier this month.

johanna.treeck@thomson.com

jmt/jlw

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