Translated material
Wealthy Norilsk Nickel
The company will pay 50% of net profit for dividends
The Board of Directors of Norilsk Nickel yesterday recommended that shareholders allocate 50% of net profit, or $1.325 billion at the rate of 210 rubles, for dividends for 2009. per share. The company did not pay dividends in 2008, receiving a net loss of $555 million.“The net profit of Norilsk Nickel for 2009 amounted to $2.651 billion. It seems to us and how the business world perceives it, in crisis conditions these are not bad indicators. Therefore, despite the fact that there was a recommendation from the board to allocate 20-25% of net profit to dividends (as provided for by the company’s dividend policy), we decided to allocate 50% of net profit to dividends,” company CEO Vladimir Strzhalkovsky told reporters yesterday (pictured) . Shareholders will now consider these recommendations at the annual meeting on June 28. But they don’t seem to have a unanimous opinion on the company’s dividend policy.
As Mr. Strzhalkovsky reported yesterday, RUSAL (the company owns a blocking stake in Norilsk Nickel) proposed to allocate $3 billion to pay dividends. “As you understand, this is more than net profit,” noted the general director of Norilsk Nickel. “This is a significant financial burden on the company, and moreover, more than 50% is not allowed to be allocated without prior agreement with creditors.” But RUSAL has a different position. According to a company representative, “increasing dividend payments to shareholders is a matter of agreement with creditors, which is not difficult to obtain in today’s situation, when the financial condition of Norilsk Nickel does not raise any doubts among creditors, and there is $15.6 billion in its accounts.” . retained earnings from previous periods.” In addition, RUSAL believes that “given the company’s current net debt to EBITDA ratio, which is significantly lower than the average similar indicator for other companies in this sector, Norilsk Nickel can ensure the payment of at least $3 billion in dividends without damaging the company’s balance sheet "
Mr. Strzhalkovsky, in turn, noted: “We understand their difficult situation, but one company cannot exist at the expense of another,” said Mr. Strzhalkovsky. “Norilsk Nickel has its own investment plans, production and social obligations.” RUSAL advised the head of Norilsk Nickel to adhere to his duties. “The financial position of RUSAL does not raise doubts among either its shareholders or its creditors, and does not in any way affect the activities of Norilsk Nickel and its management, whose main task is to concentrate on the efficiency of the MMC business and to pay attention to shareholders and protect their interests, in including through the payment of dividends corresponding to the financial condition of Norilsk Nickel,” the company notes.
The head and main owner of RUSAL, Oleg Deripaska, previously stated that RUSAL would be able to use the dividends received to pay off its debt, which amounts to about $12 billion. He also said that Norilsk Nickel is a strategic asset for RUSAL, and the company intends to pay more attention to its operating activities. Mr. Deripaska even put forward his candidacy for the board of directors of Norilsk Nickel. “I think I can shake up any company,” he said, while at the same time emphasizing that he did not believe that the company was being run ineffectively.
If shareholders approve the issue of dividends, these will be the first payments that RUSAL will receive since it became a co-owner of Norilsk Nickel. “It is clear that RUSAL needs these dividends more than other shareholders - Vladimir Potanin and Mikhail Prokhorov,” says Uralsib analyst Dmitry Smolin. “But with such a good balance sheet, Norilsk Nickel can afford such payments.”
For its financial stability and timely provision of external debt and financing of the investment program, Norilsk Nickel, according to its deputy general director Dmitry Kostoev, is considering the possibility of issuing ruble bonds. The total volume of the issue is planned to be 100 billion rubles, it will be placed in several tranches and designed for several years. “The total volume will be divided into two types of instruments - classic and exchange-traded bonds. There are 50 billion rubles inside each of the instruments. there will be a breakdown into four tranches - two of 15 and two of 10 billion rubles,” said Mr. Kostoev. This issue will be considered based on the market situation, as well as depending on the need for debt servicing and investment. True, according to Mr. Strzhalkovsky, by the end of June the company independently intends to repay its debt to banks in the amount of $1.83 billion. As is known, during 2010 Norilsk Nickel is obliged to pay $2.97 billion.