Potanin Said to Ask Norilsk Board to Study 2% Share Buyback

Billionaire Vladimir Potanin’s Interros Holding asked OAO GMK Norilsk Nickel (GMKN)’s board to consider buying back as much as 2 percent of its stock from the market, said two people with knowledge of the request.

Interros, holding 28 percent of Norilsk, wants the board to study measures to boost the valuation of the world’s biggest nickel producer, the people said, declining to be identified as the information is private. Interros also asked the board to have management begin preparations to cancel a 10 percent stake held by Norilsk units following previous buybacks, they said.

The board will consider how to support the valuation at a June 28 meeting, Norilsk said in a filing yesterday without giving further details. The company may seek a shareholder vote on canceling stock by the end of the year, Potanin said in May.

Norilsk last year spent $9 billion on buybacks opposed by United Co. Rusal, the company’s second-largest shareholder with a 25 percent stake. Based on its current share value, Norilsk may spend about $625 million to buy back a 2 percent stake.

The company, which has tumbled 24 percent in a year, jumped as much as 1.9 percent on the buyback plans, before closing up 0.7 percent at 5,325 rubles at today’s close in Moscow, the highest level in almost two months.

“Norilsk holds about 17 percent in quasi-treasury stock and should it retire 10 percent, it still can buy back up to 3 percent from the market to keep the number of treasuries within the 10 percent limit imposed by Russian law,” Kirill Chuyko, a UBS AG (UBSN) analyst in Moscow, said by phone. “The buyback can help to support share values and $625 million isn’t a big amount for Norilsk to spend.”

The proposed share cancellation will allow Interros to raise its stake in Norilsk to more than 30 percent without needing permission from Russian regulators, Chuyko said.

Anton Muravyev, an Interros spokesman, declined to comment, as did Alisa Fialko, a Norilsk spokeswoman. Rusal supports the planned cancellation of Norilsk shares, said Vera Kurochkina, a spokeswoman for the producer, declining to comment on buybacks.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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