According to the results of 2017, Norilsk Nickel almost doubled the debt burden, on which dividends depend. But the company calls this a temporary effect and promise to reduce it this year.

Norilsk Nickel, whose main shareholders - Vladimir Potanin and Oleg Deripaska - are in conflict because of the size of dividends, following the results of 2017 sharply increased the ratio of net debt to EBITDA at the end of 2017 - from 1.2 to 2.1, it follows from the above in the company data report.

Norilsk Nickel explained the increase in debt, in particular, because the company ahead of schedule returned advances to customers of its products for $ 650 million, as they were attracted on less favorable terms, and also paid $ 425 million to Rostekh for copper concentrate. Capital expenditures of the company in 2017 increased by 17%, to $ 2 billion. Therefore, its working capital increased from $ 0.7 billion to $ 2.15 billion, which influenced the increase in debt.

Revenues of Norilsk Nickel increased by 11% to $ 9.1 billion in the end of 2017, EBITDA - by 2%, to $ 3.995 billion.

Now Norilsk Nickel's shareholders can expect dividends of 60% of the EBITDA level if the ratio of net debt to EBITDA is not higher than 1.8. In the range between 1.8 and 2.2, the share of dividend payments is calculated by the floating ratio, and if the debt exceeds 2.2 EBITDA, dividends already make up only 30% of EBITDA. One of the main shareholders of the company, UC Rusal Deripaska (27.8%), is especially grateful for high dividends from Norilsk Nickel, to which they help to maintain high debt. A Potanin (30.4%) has repeatedly advocated a temporary reduction in dividends in favor of large investment projects to increase the company's value.

To calculate the dividends, Norilsk Nickel used a special adjusted ratio of debt to EBITDA of 1.88 (takes into account the paid interim dividends). This will allow the company to send a total of 54% of EBITDA for payments to shareholders, or $ 2.16 billion.

In 2018, Norilsk Nickel promises to reduce working capital to $ 1 billion, and the debt to EBITDA ratio to less than 1.5, which will allow the company's shareholders to expect to receive payments of 60% EBITDA. "Norilsk Nickel has already returned early this year advances of $ 300 million and plans in the near future to receive funds from its counterparties for the same amount (on more favorable terms), said the head of the economy and finance of the company Sergei Malyshev during a conference call. Aton analyst Andrei Lobazov believes that the company's weak financial performance is temporary, given its plans to reduce working capital and stable prices for metals.

But the shareholder conflict in Norilsk Nickel threatens the corporate strategy of the company and its dividends, warns Lobazov. Relations of Norilsk Nickel shareholders worsened in mid-February, when Crispian Roman Abramovich and Alexander Abramov decided to sell 4% of the company to Potanin. Interros Potanin said he was ready to pay $ 1.48 billion for this package. But Crispian offered to participate in the transaction and UC Rusal (this is stipulated by the shareholder agreement) - to buy out a proportional share of this package. Deripaska's proposal was accepted, but simultaneously filed a lawsuit in the High Court of London with a request to prohibit the transaction, calling it invalid. UC Rusal considers the price declared by Interros to be overstated, and also fears that this transaction will undermine the balance of interests of the two largest shareholders of Norilsk Nickel, Interros and UC Rusal. On February 27, the first hearings on this suit were held, the parties agreed to postpone this transaction at least until the court's decision. Proceedings will continue on March 8-9.