Russia's Uralkali, the world's largest potash producer, will buy back up to $1.5 billion of its shares until May 22, it said on Friday, after its board changed policy and proposed no dividend payment for 2014.
Uralkali posted a net loss in 2014 due to non-cash write-offs caused by a slide in Russia's ruble currency, hurt by low oil prices and Western sanctions, and announced plans to increase capacity.
Uralkali plans to invest $4.5 billion over five years to boost capacity and maintain its position as the world's largest producer of crop nutrient potash despite production being halted at its Solikamsk-2 mine.
"Taking into account Uralkali's current cash reserves, its expected future cash requirements, available cash flows and other funding resources, we are able to return up to $1.5 billion of cash to security holders," Dmitry Osipov, the company's chief executive, said in a statement.
The board of directors also changed its dividend policy from a previously fixed payment of at least 50 percent of net income. The level of payment will now be determined by the board.
As part of the buyback, Uralkali, part-owned by Russian tycoon and politician Mikhail Prokhorov and by fertilizer firm UralChem, aims to buy up to 468,750,000, or almost 16 percent of its shares, at a price of $3.20 per share and $16 per Global Depositary Receipt (GDR).
The company plans to fund the program from existing cash-flow and to eventually cancel acquired shares of the program. It had a cash balance of $2.5 billion at the end of 2014.
Uralkali has yet to cancel the 12.6-percent treasury share stake it bought through a previous buyback in 2011-12, analysts at UralSib said in a note.
Uralkali's shares closed at 158 rubles ($3) in Moscow on Thursday, while GDRs closed at $15.45 in London. Its Moscow shares were down 1 percent on Friday.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.
