Rusal-Sual Dispute Over Buyback Reflects Growing Tensions Among Shareholders

The board of Russian aluminum major Rusal is considering a share buyback of RUB 15 billion ($155 million), representing approximately 2.8% of its share capital. The company argues that the buyback could be beneficial for shareholders.

However, coal major Sual Partners, controlled by sanctioned Russian oligarch Viktor Vekselberg, intends to block the share buyback. Sual Partners, which holds a 25.5% stake in Rusal, has notified En+, the main shareholder with a 56% stake, of its intention to exercise its veto right. This veto is part of a 2010 shareholders' agreement that requires more than 75% of shareholder votes for key decisions.

The remaining 17.6% of Rusal shares are in free float. The disagreement between Sual Partners and Oleg Deripaska's En+ follows previous tensions, including Sual's criticism of Rusal's decision not to distribute dividends. Sual argued that Rusal should have paid $904.5 million in dividends between 2019 and 2021, rather than reinvesting in deleveraging.

Rusal is also engaged in a separate dispute regarding dividends from Norilsk Nickel, a major metals producer controlled by billionaire Vladimir Potanin's Interros. Recently, Norilsk Nickel approved an interim dividend of RUB 915 per share, totaling up to RUB 140 billion ($1.5 billion) for the first nine months of 2023.

Renaissance Capital analysts commented that Rusal's high debt burden and uncertainty around Norilsk Nickel's future dividend payments make approval of the share buyback less likely. However, they noted that if approved, the buyback could have a positive impact on Rusal's stock.