Norilsk share cancellation still on, slight delay

MOSCOW Thu Nov 8, 2012 9:18am EST

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MOSCOW Nov 8 (Reuters) - Norilsk Nickel, the world's top nickel and palladium miner, plans to cancel 10 percent of its shares held in treasury by next April, in a move that would balance the power of its main owners as they seek resolve a long-running conflict.

The cancellation of treasury stock accumulated in a series of share buybacks is expected to be finished by April, one month later than previously expected, Norilsk board member Marianna Zakharova told Reuters via email on Thursday.

Zakharova is also a deputy chief executive for legal issues at Interros, the holding company of Russian billionaire Vladimir Potanin, the largest Norilsk shareholder with a stake of 28 percent.

Interros is in talks to settle a long-running dispute with aluminium giant RUSAL, which owns 25 percent of Norilsk, over governance, board control and returns to shareholders.

A series of Norilsk buybacks, which prompted it to accumulate treasury shares, has been opposed by Oleg Deripaska, the CEO and main shareholder of RUSAL, which is struggling to work off a large debt burden.

Interros and Norilsk management together control the miner's board and the fact that they chose not to block the cancellation of the shares is seen by analysts as evidence of progress in talks between the shareholders.

"Nine out of 13 directors voted in favour," Alfa Bank's analysts said in a note. "This suggests that Interros and RUSAL are aligned on this issue and signals that there is a desire of the two sides to work together."

Sources familiar with the shareholder talks played down any link with the planned cancellation of the treasury stock, first made public by Interros in June.

"The opinions of RUSAL and Interros regarding the share cancellation plan coincided during the summer. But it is only one episode, that's why there is no need to overestimate it," said a source close to one shareholder.

After the share cancellation, the combined stake of Interros and Norilsk management would decrease to 39 percent from the current 45 percent, while RUSAL and iron ore maker Metalloinvest, which currently owns 4 percent, would rise to 32 percent from 29 percent, Sberbank CIB said in a note.

The composition of the Norilsk board would not change to reflect the shift in ownership until its annual shareholders meeting, typically held in the month of June. (Reporting by Polina Devitt and Andrey Kuzmin; Editing by Douglas Busvine and Mark Potter)

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