OAO GMK Norilsk Nickel, Russia’s largest mining company, said its board will discuss a possible share buyback, the third this year, on Aug. 15.
The plan follows a proposal by billionaire shareholder Vladimir Potanin’s Interros Holding Co., Norilsk said today in a website statement. The nickel producer will consider the price of its last buyout offer to shareholder United Co. Rusal when setting the level for the potential transaction, it said.
Norilsk’s Corbiere Holdings Ltd. unit announced a $1.2 billion buyback on April 5 after spending $3.3 billion at the beginning of the year to purchase a 6.85 percent stake. Norilsk has also made offers to buy back stock from Rusal, the latest being a $12.8 billion bid for a 20 percent holding equating to about $335 a share. Rusal rebuffed the approach in March.
At that level, a new buyback would offer investors a 56 percent premium to the market price, George Buzhenitsa, an analyst at Deutsche Bank AG, said by telephone from Moscow. “If this is the case, I think the offer will be made for a small amount of shares,” he said.
Norilsk shares rose 1.6 percent to 6,603 rubles at the 6:45 p.m. close in Moscow, the biggest one-day gain since June 28.
In June, Norilsk agreed with a group of international banks on $800 million of financing for one year, the company said today in its annual report. The funds may help finance a buyback, according to Deutsche Bank’s Buzhenitsa.
Norilsk plans to use the loan for “general corporate purposes,” Erzhena Ishenko, a company spokeswoman, said by phone, declining to elaborate.
Norilsk’s buyback announcement sparked criticism from Rusal, whose billionaire Chief Executive Officer Oleg Deripaska is locked in a dispute with Potanin over control of the nickel company.
“The buyback is aimed at satisfying the demand of one particular shareholder,” Maxim Sokov, Rusal’s deputy CEO, said by e-mail, adding that Rusal will use “all possible legal proceedings” against Interros. The buyback plan may result in losses for Norilsk of as much as $1 billion, he said.
Interros’s press office declined to comment on Sokov’s statement. Norilsk’s Ishenko said the plan was proposed by Interros and is yet to be discussed by management and the board.
The buyback would be conducted by a unit of Norilsk, according to the agenda for the Aug. 15 meeting, seen by Bloomberg News. The terms will be based on the recommendations of banks consulting on the deal, along with the price of the latest offer to Rusal, the agenda shows.
Corbiere said today it repurchased a 2.38 percent stake in Norilsk’s last buyback.