REFILE-UPDATE 3-Oligarchs, not investors, to get Abramovich Norilsk windfall
* Abramovich to pay RUSAL, Potanin $1.5 bln in revised deal
* Abramovich was expected to buy shares from Norilsk for $2 bln
* The deal leaves less cash for Norilsk future dividend payments
* Norilsk to cancel almost 17 pct of treasury shares
By Polina Devitt
MOSCOW, Dec 11 (Reuters) - Roman Abramovich, the Kremlin's enforcer on a peace deal at Norilsk Nickel, will pay cash straight to the Arctic giant's two main oligarch owners for a stake in the company, depriving other investors of the windfall from an end to a billionaires' feud.
Norilsk Nickel, which mines the vast mineral deposits of Russia's far north, was one of the biggest prizes handed to insiders in the post-Soviet carve-up of Russian industry that created a clique of politically powerful tycoons.
For years the world's largest nickel and palladium producer has suffered from a feud between its two main owners, billionaires Vladimir Potanin and Oleg Deripaska.
Fellow billionaire Abramovich, owner of London's Chelsea football club, settled the row last week by sweeping in to buy a stake under a deal that appeared to have the blessing of President Vladimir Putin.
A revision, announced on Tuesday by Norilsk and Deripaska's Hong Kong-listed aluminium producer RUSAL, would see Abramovich buy a slightly smaller stake, but pay for it directly to the two billionaires' firms, rather than Norilsk.
Analysts said that means the cash windfall injected by Abramovich's Millhouse holding company would bypass Norilsk's minority investors, and probably force Norilsk to borrow to fulfil promises to increase its dividends.
"This means that Norilsk Nickel (as well as its minorities) will not receive any cash from Millhouse Capital's arrival as minority shareholder," J.P. Morgan Cazenove said in research.
Under the original deal, Abramovich was to buy a 7.3 percent stake in Norilsk from the company itself for $2 billion, and also be given voting power over some of Deripaska's and Potanin's shares, representing a total of 22 percent. The revision would see Abramovich buy a 5.86 percent stake for $1.5 billion and be given voting control over about 20 percent.
Alexander Abramov, Abramovich's partner in Evraz, Russia's largest steelmaker, could become the new board chairman at Norilsk Nickel, a source close to on e of shareholders s a id.
Norilsk's minority shareholders have spent the last four years caught in the quarrel between Potanin and Deripaska, who resisted pressure from his own shareholders to sell RUSAL's stake in Norilsk to pay off debt, and instead campaigned for management changes and dividends from the Arctic giant.
The revision, likely to have been blessed by the Kremlin, appears to be a win for Deripaska, whose aluminium company, with $10.7 billion in debt, is struggling with weak aluminium markets and has called for production cuts to boost prices.
"The difference is Deripaska gets cash up front, which he needs for RUSAL," a Moscow based equity trader said, asking not to be identified while discussing the deal.
With the Moscow market up 0.19 percent, Norilsk shares fell 2.36 percent to 5,210 roubles per share by 1152 GMT, while shares in RUSAL ended down 0.6 percent in Hong Kong trade.
According to the source, Norilsk Nickel will stick to a pledge to pay dividends, another key demand by Deripaska, in the amount of $3 billion per year for 2012-2014. Th is wou ld r o ughly equal Nor ilsk Nickel's expected earnings, VTB Capital analyst Nikolai Sosnovsky said.
"The deal is disappointing to those minorities who expected funds from the deal to come to the company and to return via dividends," Sosnovskiy said, adding the company would likely need to borrow to fund dividends instead.
"Payment of almost 100 percent of net income would be difficult, because of capex," Sosnovskiy said.
Under the revised terms, RUSAL said Abramovich would acquire 9.29 million shares from Potanin and RUSAL at $160 per share, implying an 11 percent discount to Norilsk's market price of 5,380 roubles ($180) at Monday's close.
Abramovich will hold 5.87 percent of Norilsk Nickel, RUSAL would hold 27.8 percent and Potanin's Interros would hold 30.3 percent, after Norilsk's treasury shares - amounting to almost 17 percent of its issued capital - are cancelled.
To ensure Abramovich's role as enforcer of the peace, the other two billionaires will give him voting power over some of their shares, so that his voting stake amounts to about 20 percent. That would leave the three billionaires with nearly equal voting stakes, meaning Abramovich can impose a resolution in any dispute between the other two.
Abramovich, the 68th-richest man in the world with a fortune estimated at $12.1 billion by Forbes magazine, is widely viewed as having among the strongest Kremlin ties of the oligarchs. He himself once co-owned some of RUSAL's assets with Deripaska.
Potanin and Deripaska have been locked in a shareholder dispute since the RUSAL bought a one-quarter stake in Norilsk just before the 2008 global crash in a deal around $14 billion.
Deripaska had accused Potanin of running the company on behalf of his own interests and refusing to pay out profits in dividends to other shareholders. Lawsuits between them were cancelled as part of last week's deal.
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