Vladimir Potanin's Interros, which owns Norilsk Nickel's shares, proposed another major shareholder of UC Rusal to minimize dividends for 2020. Under the current agreement, Norilsk Nickel must pay about $3.5 billion for 2020.

According to Interros CEO Sergey Batekhin, the Norilsk Nickel Board of Directors will consider Interros' proposal on March 29. He said that the current amount of dividends seems to the company "excessive, given the challenges facing the company and the whole situation." In order to pay dividends and support the investment program, under the current formula, Norilsk Nickel will need to borrow, Batekhin explained. “Our proposal is to minimize these payments,” the top manager said, without specifying how.

Interros also suggests that UC Rusal change its dividend policy without waiting for the shareholder agreement to expire (January 1, 2023). Batekhin said that the company offers shareholders to pay from free cash flow (real money that the company earns) minus the costs of current activities and development, and not from EBITDA, which does not take into account capital investments. Interros considers payments at the level of 50-60% free cash flow to be optimal, which should ensure a dividend yield of Norilsk Nickel shares of 5-7%.

If an agreement on a dividend cut before 2023 fails, Norilsk Nickel may deduct the surplus that shareholders will receive in 2021-2022 from future dividends, Batekhin said.

Sergei Batekhin

Director of Interros

You need to be socially acceptable for the society in which you live - and for 80 thousand of your employees, and for the public, and for the authorities.

Shares of Norilsk Nickel on the news fell by 2.56% (by 13.15 Moscow time), UC Rusal - by 1.9%.

• Vladimir Potanin's Interros now owns about 34% of Norilsk Nickel's shares. UC Rusal, which until recently was controlled by Oleg Deripaska, owns 27.8%. The share of Crispian Roman Abramovich and Alexander Abramov is 4.2% of the shares.

• There is an agreement between the largest shareholders of Norilsk Nickel, according to which dividends must be paid twice a year and in the amount of at least $1 billion. Nornickel annually sends shareholders about 60% of its pre-tax profit (in 2019 it amounted to $7.92 billion).

• The structures of Potanin and Deripaska have been arguing about Norilsk Nickel's dividends for more than 10 years. actively The conflict began to develop at the end of 2017, when Potanin decided to discuss with Oleg Deripaska a plan for the development of Norilsk Nickel, which implies a large increase in the investment program. Deripaska responded by pushing for an increase in dividends to at least $2.5 billion a year, which, from Potanin's point of view, left insufficient funds even to keep the company running.

• In the spring of 2020, Potanin proposed limiting the company's dividends in 2020 to a minimum level (up to $1 billion) due to the impact of the coronavirus pandemic in order "not to irritate people," and called the agreement a "rudiment" that allows putting pressure on Norilsk Nickel.

• Recently, Norilsk Nickel paid a huge fine of 146 billion rubles for a diesel fuel spill in 2020. The company announced that the payment was made from dividends.