The billionaire shareholders in OAO GMK Norilsk Nickel may agree to distribute more than $10 billion in dividends from the world’s largest producer of the metal as part of an agreement to end a four-year battle over control, according to three people with knowledge of the talks.
Norilsk would pay the money on profit earned in 2012 to 2014, the people said, asking not to be identified because a final agreement hasn’t been signed. The payout would include about $2 billion that Norilsk units will receive when Roman Abramovich buys a 7.3 percent stake, they said.
Oleg Deripaska’s United Co. Rusal, with 25.1 percent of Moscow-based Norilsk, and Vladimir Potanin’s Interros group, with 28 percent, are working to resolve disputes about strategy, dividends and board representation. The battle has contributed to a decline of more than 45 percent in Norilsk’s London stock from a May 2008 high and stymied investment in expansion.
“Rusal would be able to cover all of its interest payments with the dividends,” Dmitriy Kolomytsyn, a Morgan Stanley analyst in Moscow, said by phone. “Abramovich would get back almost half the funds he’ll pay for his Norilsk stake.”
Rusal’s net debt was $10.7 billion at the end of September. It has completed early repayment of $406 million as part of an October agreement with its banks, Vera Kurochkina, a spokeswoman for the aluminum producer, said today. Rusal paid $551 million in interest last year, its annual report shows.
Norilsk plans to sell holdings, such as an 11 percent stake in the OAO Inter RAO UES power utility, the people familiar said. That may be worth $940 million, based on current share prices.
The nickel producer advanced 4.9 percent to 5,120 rubles at 4:41 p.m. in Moscow trading, the highest level on a closing basis since Sept. 17.
Press officials at Rusal, Norilsk and Interros declined to comment on the estimated dividend. John Mann, Abramovich’s spokesman, also declined to comment.
The shareholders said yesterday they agreed to sell Abramovich the shares and give him voting control over a 22 percent stake to help ensure the sparring owners observe a truce, and to name Potanin as chief executive officer of Norilsk. A board meeting will be called soon to approve the sale and the appointment, Interros and Rusal said in a statement yesterday.
Rusal has sought higher dividends from Norilsk to help pay off debt after borrowing to buy its stake in the mining company in 2008. Norilsk has approved about $3.7 billion in dividends for the past three years, according to its website. It also spent $9 billion last year on share buybacks, which Rusal had opposed.
“Norilsk can afford such payouts given it has a low debt burden and can borrow to finance projects,” said Kirill Chuyko, an analyst at BCS brokerage in Moscow. The sum would be almost all of its profit during the three-year period, without accounting for proceeds from the stake sale or the disposal of assets, he said.
A London arbitration court was scheduled on Dec. 3 to start hearing a claim from Rusal against Potanin about an alleged breach of their 2008 shareholder agreement on board representation at Norilsk. That hearing has been delayed until February, Kommersant newspaper reported yesterday, citing an unidentified person familiar with the matter.
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