MOSCOW, Oct 13 (Reuters) - Norilsk Nickel board member Mikhail Prokhorov on Monday urged the company's chairman to cancel a $2 billion share buyback, saying it could create serious financial problems for the world's largest nickel miner.
Analysts said Norilsk Chairman Vladimir Potanin, who once shared control of the company with Prokhorov, was unlikely to cancel the buyback on opposition from Prokhorov and United Company RUSAL, a one-quarter shareholder in Norilsk.
'I believe the decision to buy back shares for a total of $2 billion is very untimely and capable of putting the company on the verge of bankruptcy,' Prokhorov said in an open letter to Potanin, the largest single shareholder in Norilsk.
'With a total debt burden of more than $8 billion, the company will not be able to implement an investment programme aimed at its modernisation and will have serious difficulties in servicing its corporate debt,' Prokhorov said.
Norilsk said in August it would buy back up to 4 percent of its shares at 6,167 roubles ($235.7) each for a total 49 billion roubles in an attempt to reverse a decline caused by falling nickel prices and investor flight from Russian stocks.
The buyback price, a 27 percent premium at the time the offer was announced, was equivalent to almost four times the value of Norilsk's stock at the end of last week.
Prokhorov proposed either calling an extraordinary meeting of the board to discuss the buyback issue, or to include such a discussion in the agenda of a meeting scheduled for Oct. 20.
United Company RUSAL, to which Prokhorov this year sold his 25 percent-plus-two-shares stake in Norilsk, opposed the move. Last week it demanded the re-election of the board, which it believes is controlled by Potanin [ID:nLA695932].
'Prokhorov will only have the decision (to buy back shares) reversed if Potanin himself wants to do it,' an analyst with a major Russian investment company said.
Norilsk shares were traded at 1,550 roubles in Moscow at 1015 GMT, down 1.77 percent.
(Reporting by Aleksandras Budrys and Polina Devitt; editing by Sue Thomas) ($1=26.16 Rouble) Keywords: NORILSK/BUYBACK tf.TFN-Europe_newsdesk@thomson.com vs COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
Analysts said Norilsk Chairman Vladimir Potanin, who once shared control of the company with Prokhorov, was unlikely to cancel the buyback on opposition from Prokhorov and United Company RUSAL, a one-quarter shareholder in Norilsk.
'I believe the decision to buy back shares for a total of $2 billion is very untimely and capable of putting the company on the verge of bankruptcy,' Prokhorov said in an open letter to Potanin, the largest single shareholder in Norilsk.
'With a total debt burden of more than $8 billion, the company will not be able to implement an investment programme aimed at its modernisation and will have serious difficulties in servicing its corporate debt,' Prokhorov said.
Norilsk said in August it would buy back up to 4 percent of its shares at 6,167 roubles ($235.7) each for a total 49 billion roubles in an attempt to reverse a decline caused by falling nickel prices and investor flight from Russian stocks.
The buyback price, a 27 percent premium at the time the offer was announced, was equivalent to almost four times the value of Norilsk's stock at the end of last week.
Prokhorov proposed either calling an extraordinary meeting of the board to discuss the buyback issue, or to include such a discussion in the agenda of a meeting scheduled for Oct. 20.
United Company RUSAL, to which Prokhorov this year sold his 25 percent-plus-two-shares stake in Norilsk, opposed the move. Last week it demanded the re-election of the board, which it believes is controlled by Potanin [ID:nLA695932].
'Prokhorov will only have the decision (to buy back shares) reversed if Potanin himself wants to do it,' an analyst with a major Russian investment company said.
Norilsk shares were traded at 1,550 roubles in Moscow at 1015 GMT, down 1.77 percent.
(Reporting by Aleksandras Budrys and Polina Devitt; editing by Sue Thomas) ($1=26.16 Rouble) Keywords: NORILSK/BUYBACK tf.TFN-Europe_newsdesk@thomson.com vs COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.