Polyus Gold's Russian Unit Plans Up to $3.6 Billion Buyback

  • Polyus Gold PJSC has less then 5% of shares in free float
  • Buyback may help Kerimov family raise funds, BCS says

Polyus Gold PJSC, the local unit of Russia’s largest gold miner, offered to buy back as much as 255.3 billion rubles ($3.6 billion) of its shares in a deal that may provide billionaire Suleiman Kerimov’s family with funds to pay back part of the debt raised last year when they took the parent company private.

The Russian unit will buy 33.14 percent of its stock, at a price of 4,041.19 rubles per ordinary share or 2,020.6 rubles per American Depository Receipt, it said in regulatory filing on Friday. Investors may tender shares from Friday until May 27, with a break in acceptances from April 4 to April 12, according to a separate statement. The unit’s shares declined 1.5 percent to 3,987 rubles by 1:21 p.m. in Moscow.

More than 95 percent of the unit’s shares are held by U.K. registered Polyus Gold International Ltd., which delisted from the London Stock Exchange in December after structures owned by Kerimov’s family bought out investors. That deal was valued at more than $5 billion and was funded with a loan from VTB Bank JSC.

The Russian unit will buy shares mainly from its parent, which could help the Kerimov family raise funds to pay back part of the loan, Oleg Petropavlovskiy, an analyst at BCS Global Markets, said by phone.

“Polyus Gold International may pay dividends to the family using the proceeds it gets from selling the Russian unit’s shares,” he said. The offer price, at market level now, probably won’t be attractive for minority owners, Petropavlovskiy said.

Should Polyus Gold International tender the maximum amount of shares in the buyback, the local unit will be able to buy only 1.55 percent of its stock from minority owners, according to the memorandum for the offer, published on Friday.

Polyus Gold PJSC agreed on a $2.5 billion credit line from Sberbank PJSC in January, which may be used for a buyback, the Kommersant newspaper reported at the time.

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