Norilsk May Cancel 10% of Stock in March With Month Delay

OAO GMK Norilsk Nickel (MNOD), the world’s largest producer of the metal, will proceed with a plan to cancel as much as 10 percent of its stock and may complete the move in March, said Marianna Zakharova, a board member.

“We always supported the idea of a share retirement as it is the right thing to do and beneficial to all shareholders,” Zakharova said in a phone interview. Norilsk’s board today approved amendments to the cancellation plan, she said, avoiding a potentially longer delay to the transaction.

United Co. Rusal, controlled by billionaire Oleg Deripaska and holder of a 25 percent stake in Norilsk, said yesterday it was “strictly against” any delay in retiring the stock because the deal is a step toward improving Norilsk’s corporate governance. Deripaska has since 2008 been locked in a dispute with rival Norilsk shareholder Vladimir Potanin over the running of the company. Zakharova is deputy chief executive officer for legal issues at Potanin’s Interros Holding.

Norilsk’s board proposed the cancellation plan in June. The company intended that the stock be retired in February 2013 by shutting down Norilsk Nickel Investment Ltd., a unit that holds the shares. That plan may be delayed after United Co. Rusal won a court judgment last month, ruling that the Norilsk board violated a law by approving a $4.5 billion buyback by the unit in 2011, people with knowledge of the situation said yesterday.

Norilsk Nickel Investment intends to appeal the court ruling and needs to be kept open to do this, the people said.

Rusal Representatives

Today’s board meeting agreed an amendment to overcome that obstacle by allowing the unit to spin off the stake in the parent company into a new entity and thereby allowing its cancellation, Zakharova said.

“I think this will delay the process a month and the transaction may happen in March,” Zakharova said. Rusal representatives on the board voted in favor of the amendment, she said.

Rusal’s Norilsk board members voted against a proposal to delay the cancellation transaction, and in favor of the alternative that allows the stock to be retired, Maxim Sokov, director of strategic investment, at Rusal, the world’s biggest aluminum producer, said in e-mailed comments.

Norilsk shares fell 1.7 percent by 6:32 p.m. in Moscow today to 4,807 rubles per share.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net