(Rewrites first paragraph, adds details on impact of share offer, share price, background)
LONDON May 20 (Reuters) - Miner Kazakhmys, a top shareholder in ENRC, said it would consider a potential cash-and-share buyout bid for its rival, giving its first response to a potential offer from ENRC's trio of founders first signaled last month.
ENRC's billionaire co-founders Alexander Machkevitch, Alijan Ibragimov and Pathokh Chodiev said in April they were weighing up a buyout to take the company private, together with the Kazakh government, which is also a top shareholder.
The structure of the current indicative proposal - sent to ENRC's board last week and detailed at the weekend for the first time - would include $1.6 billion in cash but also the Kazakh government's almost 27 stake in Kazakhmys.
Kazakhmys shares rose as investors welcomed a mooted offer structure that even at current levels - below ENRC's market price and the stake's value on Kazakhmys books - would mean almost $890 million of cash for top shareholder Kazakhmys and 77 million of its own shares.
It would also lift Kazakhmys's "free float" of readily tradeable shares, while removing both the government as a key shareholder and an ENRC holding which has proved a headache for the company.
Kazakhmys shares have more than halved since the start of the year, hit by a weaker copper price as well as troubles that have battered ENRC.
ENRC, which listed in London in 2007, has been hit by bitter boardroom battles, corruption probes and an ill-timed acquisition spree that left it with $5 billion of debt.
"All things considered, we would view the sale of its stake in ENRC - even based on the initial offer - as a positive for Kazakhmys," analysts at brokerage Jefferies said in a note.
"The cash would strengthen the company's balance sheet and a removal of the overhang (of ENRC shares) would likely lift Kazakhmys's equity valuation."
In a statement, Kazakhmys said its shares in ENRC were "not considered a strategic investment ... The board will give due consideration to any proposal made by the consortium to shareholders at the appropriate time".
One source with knowledge of the matter said on Monday that while the price was not yet right, Kazakhmys was "not unhappy" with the structure of the mooted deal.
Kazakhmys support is key for the trio of oligarchs as without the miner's 26 percent a buyout cannot go ahead.
STOCK AND ORE
ENRC's independent directors said over the weekend they had rejected a tentative buyout offer of 175 pence in cash and 0.231 of a Kazakhmys share - or just over 253p per ENRC share, at Friday's closing price and roughly 255p at Monday's prices.
That would be below the current market level and ENRC shares trading at around 264p on Monday morning suggested some traders expect an increase to the cash portion of the offer.
Even at 264p, the offer would likely mean a hefty writedown for Kazakhmys, which has its holding on the books at closer to 375p, according to analysts.
But it was the structure of the offer that looked positive and prompted sources close to the situation to signal the miner's cautious backing.
The Kazakhmys stock in question comes from the government's almost 27 percent shareholding in Kazakhmys.
That means if the bid were to be accepted in its current shape - regardless of the cash portion - the Kazakh government would cede its entire stake in Kazakhmys, and the miner's own holding in ENRC would mean it would be handed back 77 million of its own shares.
A likely eventual cancellation of these shares would boost its free float to almost 60 percent from just under 40 percent
"Although this is indubitably a low-ball bid for all offerees, the terms will have particular resonance for Kazakhmys," strategist Jim Milligan at Olivetree said in a note, adding the offer equated to a 15 percent buyback.
ENRC's founders and the Kazakh government own more than 54 percent of ENRC shares. At Friday's close, their offer valued ENRC at just under $5 billion.
At around 1020 GMT, Kazakmys shares were up 1.8 percent at 344.7p, paring earlier gains, while ENRC was down 2.9 percent at just under 264p. The London mining sector was down 1.2 percent. (Editing by Sinead Cruise and David Holmes)