Nornickel's plan to cut dividends needs scrutiny - shareholder EN+

En+ MKPAO

19/11/2019 15:42

* EN+ represented on Nornickel's board
    * EN+ ready to discuss sensibly Nornickel's proposals.

    By Pratima Desai and Veronica Brown
    LONDON, Nov 19 (Reuters) - Norilsk Nickel's  GMKN.MM  plan
to reduce dividends to fund investments to boost output and cut
emissions requires scrutiny as dependable payouts are critical
for shareholders, major stakeholder EN+ told Reuters on Tuesday.
    Norilsk Nickel, a major nickel and palladium producer, said
on Monday that it would cut dividends in 2023-2025 as the
Russian company's annual capital expenditure peaks at $3.5-$4
billion in 2022-2025.  urn:newsml:reuters.com:*:nL8N27Y2E0
    London-listed EN+  ENPLq.L  owns nearly 28% of Nornickel
through its shareholding in aluminium giant Rusal  0486.HK .
    "Like any major capex project it needs proper scrutiny, it
needs to be rigorous and it needs to be transparent. However, we
are also a shareholder...we see the importance of continued
reliable dividends," EN+ Chairman Greg Barker said in an
interview with Reuters.
    "We are in favour of investing in any initiative that will
reduce the pollution footprint of Norilsk Nickel."
    Rusal, the world's largest aluminium producer outside China,
and En+ have long been supported by dividends from Nornickel
during times of weak aluminium prices.
    Barker said "we have adequate representation on Nornickel's
board via Rusal" and the company was "ready to engage and
discuss sensibly" Nornickel's proposals.
    Nornickel's environment project costing $3.5 billion is
focused on the Arctic city of Norilsk, which has been the
world's top individual emitter of sulphur dioxide.  urn:newsml:reuters.com:*:nL5N25F33S
    Nornickel Vice President Sergey Dubovitsky said at an
investor briefing in London on Monday that dividends would
remain in line with a shareholder agreement until it expires in
2022.
    Norilsk currently pays out 60% of core earnings known as
EBITDA if the company's net debt to EBITDA ratio is below 1.8.
The payout declines on a sliding scale if the ratio is 1.8 or
above, falling to 30% of EBITDA if the ratio is above 2.2.

 (Reporting by Pratima Desai and Veronica Brown; editing by
Susan Fenton)
 ((pratima.desai@thomsonreuters.com; +44 207 542 5113;))