Norilsk Gains Most in 2 Weeks on Dividend Revision: Moscow Mover

OAO GMK Norilsk Nickel gained the most in almost two weeks after its main owners gave the world’s biggest nickel and palladium producer added flexibility in dividend payouts, revising a 10-year shareholder accord.

The stock rose as much as 3.1 percent, and traded up 1.6 percent at 4,746 rubles by 3:49 p.m. in Moscow, the biggest intraday gain since Sept. 19. The volume of shares was equivalent to 115 percent of the three-month average. The benchmark Micex Index climbed 0.3 percent.

Shareholders United Co. Rusal and billionaire Vladimir Potanin agreed last year on Norilsk dividends as part of an accord to end a four-year dispute at the company. In part, the amended plan has the metals company tie distributions to earnings before interest, taxes, depreciation and amortization starting with dividends from this year’s profit, rather than 2015, according to a statement from Rusal.

“The change in dividend policy gives Norilsk more flexibility in timing when it should make payments, while the agreement is still beneficial for Rusal,” Kirill Chuyko, head of equity of BCS Financial Group in Moscow, said by phone. “In the nearest four years, Norilsk may pay a bit more than was originally agreed.”

Rusal and Potanin, who became Norilsk’s chief executive officer as part of their peace accord, brought in billionaire Roman Abramovich last year as a shareholder to help mediate their battle.

Dividend Yield

Rusal depositary receipts gained 0.8 percent to 96.23 rubles. Rusal owns 28 percent of Moscow-based Norilsk. Potanin’s Interros controls about 30 percent in Norilsk, while Abramovich and his business partner Alexander Abramov hold about 6 percent.

Under the revised terms, Norilsk will pay at least $2 billion in dividends each year for 2013 and 2014, after paying a similar amount from 2012 profit. They had initially planned for Norilsk to pay as much as $9 billion in dividends for 2012 through 2014, then half of Ebitda in subsequent years.

A $2 billion payout by Norilsk for this year would give a dividend yield of 9 percent, among the highest in the universe of metals and mining companies, Chuyko said.

For dividends from 2015 earnings, the revised terms call for Norilsk to pay 50 percent of Ebitda, plus the difference between $7 billion and the combined total of distributions made in that year and 2014. Norilsk is allowed to reduce the dividend for 2015 by as much 20 percent and to make up for any shortfall the following year, according to today’s statement.

Sale Proceeds

Norilsk will also distribute as much as $1 billion raised from the sale of assets at the first dividend distribution date following the revised deal, Rusal said.

For 2017 and subsequent years, the payments will be 50 percent of Ebitda. Petr Likholitov, a Norilsk spokesman, declined to comment.

Norilsk plans to sell international assets to focus on profitable mines in northern Russia, according to a strategy review agreed by its board. The company will prioritize operations with potential annual revenue exceeding $1 billion, profit margins of more than 40 percent and resource potential for more than 20 years of output, Pavel Fedorov, Norilsk deputy chief executive officer, said last month.

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