Mechel may conduct up to $100 mln ADR buyback
MOSCOW. June 18 (Interfax) - The board of directors at Mechel has approved the acquisition of up to $100 million worth of the company's ordinary-share ADR, the company said on Tuesday.
Wholly owned Mechel subsidiary Skyblock Limited will conduct the buyback, which will be done on the open market or in private transactions depending on market conditions, in accordance with applicable law and other requirements.
The program does not impose on Mechel any obligations as to a specific amount of ADR, the company said. It can also be suspended at any time Mechel decides.
"The board of directors has a diligent approach toward appraising capital structure and studying ways to efficiently use cash flows to increase the company's shareholder value. The buyback decision reflects the board's confidence that the fundamental value of our company's shares is higher, and meets the interests of all of its shareholders", Mechel Chief Financial Officer Stanislav Ploschenko is quoted in the company statement as saying.
BrokerCreditService analyst Kirill Chuiko reckons the buyback could affect a quarter of the Mechel stock in circulation. Mechel is buying back stock in order to support capitalization and avoid a margin call, as the bulk of the stock is held in banks, he said.
Mechel's free float is around 30%. The company's main beneficiary is board of directors chairman Igor Zyuzin.