Rusal does not approve of possible Norilsk Nickel 2% buyback
MOSCOW. June 29 (Interfax) - Rusal does not approve of a potential deal that would see a 2% Norilsk Nickel buyback, considering this to be an irrational use of funds.
"Our position on buybacks has not changed. A buyback is not the fairest way to distribute profit," Rusal Deputy Chairman Maxim Sokov told the press on the sidelines of the Norilsk Nickel AGM.
Under the current circumstances it is not sensible to spend $600 million on a buyback, he said.
If there is negative macroeconomic news, such as Greece exiting the EU, a buyback of 2% will not provide serious support to company share quotes, Sokov said.
The value of the shares that Norilsk Nickel acquired in the 2011 buyback is around $5 billion but Norilsk Nickel spent $9 billion on them, Sokov said.
If the company had not spent that money buying its own shares "maybe there would be no need for a reduction in the investment program now," he said.
Rusal abstained in the issue of a possible buyback in the Norilsk Nickel board Thursday, he added.
Andrei Bugrov, the chairman of the Norilsk Nickel board and a representative for Interros, said the board's decision does not have a term within which Norilsk Nickel management must submit their proposals on increasing capitalization (envisaging the possibility of a 2% buyback).
Another part of the capitalization boost issue is the redemption of 10% of Norilsk Nickel shares. The redemption process could take 6-8 months, Norilsk Nickel General Director Vladimir Strzhalkovsky said.