Uralkali approves share buyback of up to $1.5 bln in Q2
MOSCOW. April 24 (Interfax) - The board of directors of Uralkali has approved a program to buy back company shares and GDR in the amount of up to $1.5 billion in the second quarter of 2015, the Russian potash giant said in a press release.
The price of the buyback will be $3.20 per share and $16 per GDR. The company plans to purchase up to 15.97% of its issued and outstanding shares.
"The program, funded with existing cash-flow, is intended to provide an opportunity to distribute cash to security holders at a time when a dividend distribution would not comply with the company's dividend policy. The company currently plans to eventually cancel the acquired shares. Until such transfer and eventual cancellation, the securities may be used as security for financings by the Uralkali group, including derivative transactions such as repurchase transactions, as well as for other general corporate purpose," Uralkali said.
"Uralkali had a cash balance of $2.5 billion as of December 31, 2014, and its cash position continues to be strong. While under our current dividend policy, we are not able to pay dividends for 2014, taking into account Uralkali's current cash reserves, its expected future cash requirements, available cash flows and other funding resources, we are able to return up to $1.5 billion of cash to security holders through a tender offer to shareholders and GDR holders of Uralkali. Effecting a tender offer in the manner proposed, rather than a dividend, allows Uralkali not to reduce its current levels of retained earnings until the shares purchased in the tender offer are ultimately cancelled," said Uralkali CEO Dmitry Osipov.
The Cyprus-registered Enterpro Services Limited is repurchasing the shares. The parent company is lending the firm up to $1.6 billion for the purpose. Enterpro has entered into an agreement with Limited Liability Company Computershare to act as depository and broker (authorized representative) with respect to acquisition of common shares in Russia. The Bank of New York Mellon will be acting as the tender agent for the tender of the GDRs in the tender offer.
The tender is open from April 24 to May 22, inclusive.
Other decisions passed by the board of directors included adoption of a new, discretionary dividend policy providing for the amount of the dividend to be determined by the board, depending on the company's financial state and the general economic situation. In other words, the company is abandoning its obligation to pay shareholders at least 50% of net profit.
Uralkali's treasury stake, currently 12.6%, built up in 2012-2013 as the result of a buyback on which the company spent some $1.2 billion. Also, in the summer of last year, Uralkali bought back 6.4% of its shares from Forman Commercial Limited, the beneficiary of which is Zelimkhan Mutsoyev, for around 41 billion rubles.
Uralkali planned to cancel the treasury shares last year, but then delayed this indefinitely. CJSC Uralkali-Technology manages the stake.
Uralkali has 2,936,160,000 issued ordinary shares, par value 50 kopecks each.
Mikhail Prokhorov's Onexim owns 27.09% of Uralkali UralChem has 19.99% and Chinese Chengdong Investment Corporation (CIC) has 12.5%. The fre float is 27.8%.