Norilsk, which mines and produces metals including nickel and palladium, said it plans to acquire up to 14.7m shares at $306 each for common shares and $30.66 for global depository receipts (GDRs), representing a 7.71 per cent stake in the firm.
Norilsk’s US-listed GDR shares rose more than six per cent to hit $22.27 yesterday afternoon while its Russian shares rose 7.7 per cent to 7,000 roubles.
Earlier this month, Rusal rejected Norilsk’s offer to buy 15 per cent of its own shares back from Rusal for $8.75bn, and Norilsk will now look to buy from minority investors.
Shareholders have until 28 October to sign up for the buyback. The stock will be acquired by Norilsk Nickel Investments, a wholly-owned subsidiary based in the Virgin Islands.
Norilsk said it will fund the massive buyback with a new $3.5bn loan facility. Bank of New York Mellon, Citigroup and Russian investor services outfit Computershare are all working with Norilsk on the scheme. The firm said Citi could provide some of the financing.
Analysts at Troika Dialog said yesterday that the buyback is currently fully priced into Norilsk shares. They estimate an allocation ratio of around 13.1 per cent, assuming that investors Trafigura, Interros and Metalloinvest all participate.
Rusal dropped a legal case to block the previous incarnation of the buyback scheme in June, but complained in August that the plans were “in the interests of the management itself and of the Interros group and do not meet the interests of all the shareholders of the company”.
Norilsk did not yesterday rule out the possibility of Rusal launching a fresh attempt to block this round of buybacks.