Page 116 - RusRPTApr21

paid an interim dividend of RUB98.64bn (c$1.2bn), for 9M20, and according to the formula should accrue additional c$3.5bn, which Batekhin called excessive. Batekhin suggested switching to FCF-based payments and paying 50-60% of FCF but this is impossible without adjusting the shareholders' agreement. In this case, Norilsk Nickel could reduce the final dividend to $2.1- 2.8bn.
Norilsk Nickel’s current dividend policy, which is linked to the shareholder agreement between Norilsk Nickel CEO Vladimir Potanin and UC Rusal, stipulates the payment of 60% of EBITDA in dividends provided ND/EBITDA is below 1.8x but 30% if it is above 2.2x (with a 30-60% payout if it is between 1.8-2.2x). Historically, Potanin has advocated for a less generous dividend payment, linked to FCF, to preserve the company's financial leverage ahead of the capex cycle. Over the last three years, Norilsk Nickel has paid 60% of EBITDA, in line with the policy, which also accounted for 91% of FCFE. For the FY21 dividends, we expect the company to comply with the agreement. Our base case for FY22 onwards assumes that the company moves to an FCFE-based payment, but pays 100% of FCFE, given the low leverage (Figures 1-2). This implies a slight decrease in the payout ratio, from 60% of EBITDA at present to around 50%.
Interros, which represents Vladimir Potanin among the shareholders, has proposed cutting Norilsk Nickel’s dividend payout from 60% of EBITDA to 50-60% of FCFE until the shareholder agreement ends in 2023F. In addition, Interros proposed minimising the final 2020 dividend (which, according to the current policy, is to amount to USD 3.5bn). Interros also noted that dialogue with UC Rusal, the second major shareholder, was difficult due to the difference in vision over Norilsk Nickel’s strategy. Rusal, however, noted that, in its view, there was a normal working dialogue between the companies and that it would be impossible to reconcile the existing agreement without analysing the track record of the company’s current management.
The board of directors of Russian oil and gas pipe maker TMK has recommended paying 9.67 rubles per share, or a total of 9.990 billion rubles, in dividends for 2020, the company said in a report on Friday. The record date was set at April 26.
ALROSA’s Supervisory Board, its equivalent of a BoD, approved an updated dividend policy on 10 March, and also decided to raise its minimum cash position from RUB 25bn to RUB 50bn. The company also announced that it aims to increase its cash position from RUB 25bn to RUB 50bn while maintaining ND/EBITDA within a range of 0.5-1.0x. The key parameters of the new dividend policy remain unchanged, as dividends will still be paid out semi- annually and be pegged to FCF and the debt covenant (ND/EBITDA). There are some changes in the new dividend policy, which features an ND/EBITDA range of 0.0-1.0x instead of two separate ranges of 0.0-0.5x and 0.5-1.0x. The minimum payout of 50% of IFRS net income remains, assuming that ND/EBITDA doesn’t exceed 1.5x. We see the new cash balance requirements as a one-time detrimental factor that, once implemented, should support a higher dividend payout via lower net debt.
● TMT
116 RUSSIA Country Report April 2021 www.intellinews.com