Russian tycoon Oleg Deripaska is ready to buy RUSAL's <0486.HK> 25 percent blocking stake in Norilsk Nickel
Deripaska's gambit seeks a way out of a row with minority shareholder Viktor Vekselberg, who quit as RUSAL's chairman two weeks ago and said the company was in deep crisis and overburdened with debt.
A buyout of the stake by Deripaska, RUSAL's chief executive and largest shareholder, at a price said in a newspaper report to be around $9 billion (5.69 billion pounds), could be opposed by minorities since he has refused far higher offers from Norilsk to buy it back.
RUSAL bought the holding in Norilsk Nickel, the world's largest miner of nickel and palladium, for an estimated $14 billion at the top of the market in 2008, and the company is still carrying an $11 billion debt burden as a result.
No official proposal has been made, but it would be the only right and beautiful way to resolve the problem, the source told Reuters on condition of anonymity.
As a result, RUSAL's debts would fall, the company would be able to pay out dividends to shareholders, raise its share price and concentrate on its aluminium projects.
The Vedomosti business newspaper said on Monday that Deripaska was prepared to offer around $9 billion for the stake, representing a premium of around 3 percent to Norilsk's closing share price on Friday.
Vedomosti, citing four sources, said Deripaska's holding company En+ might pay $4.4 billion in cash and assume a $4.6 loan to RUSAL from state-controlled Sberbank
By paying down its debt burden, RUSAL would be freed from debt covenants, enabling it to pay out $4.4 billion in dividends to its shareholders as part of the deal.
The source said there had been no mention yet of price in talks between RUSAL's shareholders. It was unclear whether Deripaska would be able to raise sufficient financing to do the deal. Sberbank declined to comment.
RUSAL's share price fell 1.9 percent in Hong Kong to HK$5.7, bringing losses since their peak last April to around 60 percent. Earlier this month RUSAL wrote down the Norilsk stake by $1.4 billion, contributing to a 92 percent fall in annual earnings.
Norilsk's shares were up 0.4 percent at 5,394 roubles in Moscow by 0940 GMT on Monday.
Deripaska vetoed three proposals from Norilsk to buy back the stake held by RUSAL for as much as $13 billion, analysts said.
But, they added, it was possible that negotiations between shareholders might progress if Deripaska were prepared to raise his offer.
RUSAL minority shareholders are unlikely to accept the transaction at a price that offers no premium to the market and no premium for control, Alfa Bank's metals and mining analyst Barry Ehrlich commented in a note.
However, we view the news as positive, given that the transaction price could potentially be improved.
Brokerage Troika Dialog noted that representatives from RUSAL and En+ would not be able to take part in any board decision to sell the Norilsk stake to Deripaska, meaning a deal would require unanimous support from minority investors.
On balance the sale of the stake under the proposed terms would be transformational for RUSAL and it appears to be the only solution to the current stalemate, so we hope it comes to pass, commented Mikhail Stiskin, analyst at Troika Dialog.
En+, through which Deripaska owns 47.4 percent in RUSAL, declined official comment. A representative for Vekselberg, who with partner Len Blavatnik owns 15.8 percent of RUSAL, could not be reached for comment.
Onexim, the investment company of billionaire Mikhail Prokhorov that owns 17 percent of RUSAL, declined to comment.
(Additional reporting by Oksana Kobzeva; Writing by Douglas Busvine; Editing by Greg Mahlich)