Norilsk Nickel Might Pay Dividend After $4.5 Billion Buyback, Potanin Says

Apr. 26 -- OAO GMK Norilsk Nickel, the world’s largest producer of the metal, may pay dividends for 2010 even after spending $4.5 billion to buy back shares, billionaire shareholder Vladimir Potanin said.

"Minority shareholders want stability, even with the shareholders conflict,” Potanin said in an interview in Moscow yesterday. “Norilsk has good financials, so I see no reasons why the company shouldn’t pay dividends.”

Potanin, who controls about 30 percent of Norilsk through his Interros holding company, has been locked in a dispute with fellow billionaire Oleg Deripaska’s United Co. Rusal over control of Norilsk since 2008. Rusal, the world’s largest aluminum producer, rejected a $12.8 billion bid from Norilsk managers last month to buy 20 percent of the nickel producer. Rusal owns 25 percent of Norilsk.

"The company should pay dividends as declared in the dividend policy,” Potanin said, without giving a specific figure. Norilsk’s policy is to pay out at least 25 percent of net income every year, according to the company. “Norilsk has good financials,” Potanin said.

The company will probably report $5 billion in net income for 2010 if there are no write-offs, implying a dividend of at least $1.25 billion, said Vladimir Zhukov, a metals analyst at Nomura Holdings Inc. in Moscow. Norilsk paid out $1.33 billion for 2009, about half of that year’s profit.

'Tea, Miso Soup’
Norilsk on April 4 said it would spend $1.2 billion buying back stock, after paying a total of $3.3 billion for 6.85 percent of its shares at the start of the year. Rusal opposed the buyback, which Morgan Stanley analyst Dmitriy Kolomytsyn said at the time would make a dividend payment for 2010 “highly unlikely.”

"Rusal has always considered dividends as the most fair way to distribute profit,” Rusal board member Vera Kurochkina said by e-mail today.

Deripaska said on a conference call with reporters on April 20 that he tried to discuss the conflict at Norilsk with Potanin, “but came to no conclusion.”

“We met some time ago, but he refused to talk about Norilsk,” Potanin said. The conversation consisted of “small talk” over “some cups of tea and miso soup,” Potanin said. “He draws such unexpected conclusions out of our talks.”