Deripaska’s En+ Sees Norilsk Spinoff Prompting Rusal Payout

By Yuliya Fedorinova

Photographer: Andrey Rudakov/Bloomberg

Maxim Sokov, chief executive officer of En+ Group Ltd., reacts during an interview at... Read More

Billionaire Oleg Deripaska’s En+ Group Ltd. said it may discuss spinning off United Co. Rusal’s stake in OAO GMK Norilsk Nickel (GMKN) as a step toward the aluminum producer resuming paying dividends.
En+ owns 48 percent of Rusal, whose 28 percent holding in Norilsk is valued at about $8.7 billion. Rusal may make its first payout since 2008 as soon as 2017 as the aluminum market recovers, En+ Chief Executive Officer Maxim Sokov said in a Sept. 15 interview in Moscow.
The dividend may come “even sooner should Rusal shareholders decide on the spinoff of the Norilsk stake together with some debt,” Sokov said. “There are no active discussions on this subject right now, but the idea is not dead. We still may see such discussions initiated.”
Rusal, the world’s largest
aluminum producer, accumulated part of its $10 billion of debt when acquiring the Norilsk stake in 2008. Spinning off that interest to shareholders would cut that debt and prompt the market to revalue Rusal, said Kirill Chuyko, chief of equity research at BCS Financial Group.
“That would be good for Rusal and its investors,” Chuyko said in a phone interview from Moscow.
Rusal shares declined 0.4 percent to close at HK$4.60 in Hong Kong trading. Norilsk shares were little changed at 7,670 rubles at 1:13 p.m. in Moscow.

Best Performer

Rusal, which reported a profit in the three months through June for the first time in five quarters, has more than doubled in value this year, making it the best performer on Moscow’s Micex Index. (INDEXCF) The gains came as the aluminum price recovered by 12 percent from a four-year low in March and as Rusal refinanced about $3.55 billion of debt last month.
“We still see significant potential for further growth,” Sokov said, adding that En+ wasn’t considering de-listing Rusal from Hong Kong, following analyst speculation at the beginning of the year. “It was obvious that Rusal was fundamentally undervalued by the market and it would be quite natural for shareholders to consider taking the company private.”

Free Float

While En+ isn’t considering selling its Rusal stake, it would welcome moves by other large shareholders to reduce their holdings and boost the company’s free float, Sokov said.
The press office of Viktor Vekselberg’s and Len Blavatnik’s Sual Partners Ltd., which owns 15.8 percent of Rusal, declined to comment. Andrei Belyak, spokesman for billionaire Mikhail Prokhorov’s Onexim Holdings Ltd., which holds 17 percent of the aluminum producer, also declined to comment.
When En+ was weighing an offer of as much as $9 billion for Rusal’s Norilsk stake in 2012, it couldn’t get approval from the aluminum producer’s other investors, people with knowledge of the matter said at the time.
Rusal signed an agreement two years ago with billionaire Vladimir Potanin’s Interros Holding Co., the largest investor in Norilsk, and Roman Abramovich’s Millhouse, to end a four-year feud over the nickel producer’s management. President Vladimir Putin had said publicly he hoped the owners would find a solution.