Rusal Vice President Elena Bezdenezhnykh about the absence of dividends from Norilsk Nickel

Norilsk Nickel, whose main shareholders are Interros and Rusal, will hold an annual meeting of shareholders on June 6, at which, for the first time since 2008, a decision to refuse to pay dividends can be approved. About why Rusal considers this decision wrong, as well as about attempts to conclude a new shareholder agreement with Interros, Kommersant was told by a member of the board of directors of MMC, vice president of Rusal Elena Bezdenezhnykh.

— Norilsk Nickel refused to pay dividends for 2022. Rusal said that there were no economic reasons for such a decision. However, since October, palladium has fallen in price by 25%, rhodium – by almost 45%, and nickel since the beginning of the year – by 20%. In your opinion, is this not a reason for refusing dividends?

— Metal prices are constantly changing. At the moment, they are not an indicator for refusal of payments. Need to watch longer. Dynamics in three years, I believe, is more indicative in this regard. In addition, it is necessary to take into account the dynamics of the exchange rate, production indicators, and they are not bad. As for the budget, it is, as a rule, conservative for any company. He must be like that. Therefore, we do not see short-term fluctuations in metal prices as a reason to forego dividends.

— How can you explain the refusal of dividends?

— We can only guess by reading the reflections in the Telegram channels. They write that in this way it is possible to demonstrate that Rusal only needs dividends. First, not only. We, as a very large shareholder, are interested in the prosperity of Norilsk Nickel and its regions of responsibility. But no one canceled the return on invested capital. This is not something that is not shameful, it is correct, logical and reasonable. All shareholders are interested in dividends.

They write that in this way it is possible to bring up “Rusal”, which gets in the way underfoot. But this is unacceptable. What does “educate” mean? We are all adults. When the issue of dividends was discussed at the board of directors, we analyzed the financial and investment components, but saw no reason not to pay.

– Rusal stated that non-payment of dividends is not economically feasible. Why?

— According to the regulation on dividend policy, the amount of annual dividends on Norilsk Nickel shares must be at least 30% of EBITDA. The regulation specifies the reasons why payment is not recommended. If Norilsk Nickel had insufficient profits, a lack of cash flow, or failure to fulfill its investment program, then there could be no talk of dividends. But none of this is. We are told not to pay dividends out of debt. Why out of debt? Dividends are paid out of profits, and loans are taken to carry out the investment program. All banks give loans under the investment program, under the normal CAPEX. We rarely see loans to pay dividends, but CAPEX programs are constantly defended at the investment committees of banks.

Norilsk Nickel, according to media reports, budgeted $1.5 billion for 2023 to pay dividends. Where will this money go now?

— It is not yet clear. Management did not provide where these funds would be directed.

– Do I understand correctly: if the budget includes funds, do they exist?

– Yes, you understood correctly, this is how the situation looked like. Although there is cash flow in Norilsk Nickel, and it is predictable.

— Are MMC shareholders currently consulting on a new shareholder agreement? Does Rusal need an agreement?

— Our position remains unchanged: an agreement in one form or another is necessary, be it a new agreement or a modification of the existing one. This is necessary not only for us, but also for other minority shareholders. We are always open to suggestions on this issue.

— Were there any offers from Rusal itself?

– Yes.

— Does Interros have an interest in the shareholder agreement? In my opinion, Vladimir Potanin does not need it.

— Your point of view has the right to exist, yes. But, firstly, the shareholders’ agreement continues to operate in terms of fiduciary obligations for previous periods, and secondly, there are veto rights enshrined in the charters, no one has canceled this. Shareholders have certain rights, and we will use them to the extent possible, given that our stake, of course, is smaller than that of Interros.

— What dividend payment scheme would suit you?

— The question is debatable. To begin with, it would be possible to build on the previously existing agreements.

— The management of Norilsk Nickel did not rule out the payment of interim dividends in the event of the sale of accumulated metal reserves. Has management provided shareholders with information on inventory sales?

— The first quarter is not indicative for any industrial company. During this period, as a rule, payments are made based on the results of the previous year. There will be something to talk about at the end of the semester. Then the success of certain sales will be visible.

– The documents of the London court between Rusal and Interros speak of Rusal’s intentions to file a second lawsuit against Vladimir Potanin and make additional claims. Has this claim been filed? What are the claims?

– I can only say that Rusal really has additional claims, in addition to those that have already been voiced.

— The shares of Norilsk Nickel, which are redeemed on the stock exchange under the incentive program for employees, will return to the market after it ends. Does this alleviate Rusal’s fears?

We have repeatedly commented on this issue, but there are still many insinuations about our position. They say that Rusal wants to kill the motivational program, but we voted for it! She must be. Our claims relate to the implementation scheme. As a person who has worked at Norilsk Nickel for more than 20 years and who has managed to participate in Norilsk Nickel’s incentive programs myself, it is not clear to me why employees are forced to switch to Rosbank payroll cards. It is not clear to me why people should register on the Atomize platform, which, like Rosbank, is an entity associated with Interros. Why can’t motivation be made clearer to people, either through stocks or money?

In the 1990s, when there was an additional issue, shares were distributed among employees in accordance with the length of service. It was such a bonus program, but no one said that these shares would be taken away from you later. Now, in five years, digital financial assets will be forcibly redeemed from a person. We believe that this is done in order to transfer voting rights on these shares to someone. Obviously, this is a motivational program rather by name, but in reality it may have some other tasks.

— In 2021, the shareholders of Norilsk Nickel considered the issue of distributing shares in Bystrinsky GOK between the shareholders of Norilsk Nickel itself. “Rusal” in this case could get 14% in GOK. Is this idea being discussed now?

— Norilsk Nickel has control over the company (GOKom.— “b”). I think it’s right, especially now. This is not the time to talk about the spin-off of such large assets and the loss of control over them. We have more pressing reasons to talk with shareholders: investments, CAPEX, dividends, incentive program.

— In 2021, Vladimir Potanin said that the joint venture with Russian Platinum had received the necessary corporate approvals. Will this joint venture be created?

– Now the joint venture is not discussed at the board of directors and at the level of shareholders.

Interviewed by Evgeny Zainullin