UPDATE: Norilsk: May Borrow Up To RUB70 Billion From Sberbank

Russian miner OAO Norilsk Nickel (GMKN.RS) said Tuesday it may borrow up to RUB70 billion ($2.3 billion) from OAO Sberbank (SBER.RS), which an analyst said is likely to fund the company's recent buyback.

"The money, if borrowed, will be spent on strategic and operational purposes," a Norilsk spokeswoman said.

Norilsk's board Friday approved the total possible amount of two credit lines from Sberbank, with an interest rate of 9.5% and a maturity of five years, Norilsk said on its website.

In late October, Norilsk took out a $1.5 billion loan with a five-year maturity organized by a syndicate of banks, led by Citigroup Inc. (C) and Societe Generale S.A. (GLE.FR). The company didn't disclose what the money was for.

Norilsk is likely to spend all the cash borrowed on its buyback, UralSib analyst Dmitry Smolin said.

The miner plans to finish the $4.5 billion buyback of 7.71% of its shares by the end of the month. The buyback share price--$306--represents a 76% premium to the Tuesday closing price.

"Even though the company has enough cash to finance the buyback, it may have chosen to borrow to keep the money on its accounts for the case if the market situation worsens," Smolin said.

Norilsk shares closed down 3% at RUB5,278 in Moscow on a higher market.

-By Nadia Popova, Dow Jones Newswires; +7 495 232-9198, nadia.popova@dowjones.com

SGS (PK) (USOTC:SGSOY)
Historical Stock Chart
From Jun 2024 to Jul 2024