Bloomberg News

Billionaire Potanin Becomes Norilsk CEO as Owners End Feud

December 17, 2012

OAO GMK Norilsk Nickel (MNOD)’s board appointed billionaire Vladimir Potanin chief executive officer as a part of an agreement with United Co. Rusal to resolve a feud among shareholders in the world’s largest nickel producer.

Potanin, 51, replaces Vladimir Strzhalkovsky, Norilsk announced at a press-conference in Moscow today. Potanin selected Strzhalkovsky, 58, to run the company in 2008 as conflict with Rusal over the management of Norilsk began.

“What some shareholders wanted has come to pass: Potanin will start work tomorrow,” Strzhalkovsky told reporters. It’s the best decision, he said.

Rusal, controlled by billionaire Oleg Deripaska, and Potanin are settling a more than four-year battle over control of Moscow-based Norilsk by balancing their representatives on the board. As part of the accord, Roman Abramovich, the billionaire Chelsea Football Club owner, will control voting rights on a 20 percent stake to help quash shareholder disputes, the parties said in a statement last week.

Abramovich’s Millhouse investment holding company is buying a 5.9 percent Norilsk stake from the conflicting parties, last week’s statement shows. Vedomosti newspaper reported today that Alexander Abramov, Abramovich’s partner in steelmaker Evraz Plc (EVR), may also buy Norilsk shares.

Abramovich Partner

“We have had talks about this deal with Rusal and Millhouse, and if Millhouse decides to have a partner in this investment, we have no objection,” Potanin said. The agreement between the Norilsk owners is valid for 10 years, he said.

Evraz’s press-service declined to comment on the possibility of investing in Norilsk.

Norilsk will target paying dividends equivalent to not less than a half of its annual earnings before interest, taxes, depreciation and amortization, with distributions made twice a year starting in 2014, Potanin said. Norilsk will seek a debt- to-Ebitda ratio not exceeding 1, he said.

The stock advanced 3.7 percent by the close in Moscow to 5,573 rubles, the highest for almost nine months.

Interros, as a managing partner in Norilsk, will have the right to adjust and delay dividend payments, depending on the company’s performance, Potanin said. This will keep the dividend policy flexible, Potanin said.

At current Ebitda projections, Norilsk will pay shareholders not less than $2.5 billion a year, Kirill Chuyko, BCS Financial Group head of equity research, said by phone in Moscow. The company will target about $9 billion of dividends in 2012 through 2014, three people with knowledge of the owners’ agreement said last week.

CEO Payout

Potanin will stay as CEO for at least 1 1/2 to 2 years, and he has the right to nominate a replacement for consideration by the partners, he said today.

Strzhalkovsky has agreed to assist Potanin as the new CEO makes a transition into the role, he said. Strzhalkovsky confirmed that the board approved a $100 million compensation payment to him on his retirement as CEO and that he will donate a portion of it.

The Norilsk board has called an extraordinary shareholders’ meeting for Jan. 29 to vote on canceling 9.7 percent of the treasury shares held by Norilsk Nickel Investment Ltd., Norilsk said today in a statement. In total Norilsk, should cancel 17 percent of its capital under the owners’ agreement. That would boost Rusal’s holding in the company to 27.8 percent and Potanin’s to 30.8 percent.

An election of Norilsk directors will be held March 11 to reflect changes in the shareholding structure following the Rusal-Potanin agreement, Norilsk said in its statement.

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


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