$2bn share buyback vote by Norilsk Nickel Board inspires more criticism from RUSAL

MOSCOW (Reuters) -Norilsk Nickel's (GMKN.MM) board voted on Friday to spend up to $2 billion buying back 4 percent of its stock, a move opposed by one-quarter owner United Company RUSAL as it wrestles for a greater say in the Russian miner. Norilsk said it would buy back up to 7.95 million of its own shares at 6,167 roubles ($253.8) each, a 27 percent premium to its Friday close of 4,855 roubles, in a bid to reinvigorate a share price that has fallen by a third since May. "This price drop was impacted mostly by factors that are irrelevant to the company's fundamentals," Norilsk Chief Executive Vladimir Strzhalkovsky, who assumed the post on Aug. 8, said in a statement. He did not say what those factors were. UC RUSAL, majority owned by billionaire Oleg Deripaska, has been at loggerheads with Norilsk's largest single shareholder, Vladimir Potanin, over the management of the world's largest nickel miner since it bought its stake in April this year. Each side has accused the other of attempting to devalue the company's stock, which has also been damaged by a downturn in investor sentiment toward Russia and a sharp decline in the price of nickel. Norilsk supplies a fifth of the world's nickel. A Moscow-based mining analyst said the buyback would be beneficial for minority shareholders, as neither Interros -- Potanin's investment company -- nor UC RUSAL were interested in cutting their stakes. "Minority shareholders worry less about shareholder conflicts than the possibility to earn some money, or about losing less in the worst case," Deutsche Bank's Mikhail Seleznyov said. RUSAL OPPOSITION UC RUSAL, the world's top aluminium producer, said in a separate statement it had voted against the share buyback and accused Interros of violating corporate governance standards by conducting an in absentia vote. "UC RUSAL has consistently advocated that funds not used in investment programmes should be distributed among all shareholders by way of a dividend," the company said. "A dividend payment would not infringe upon the rights of minority shareholders who have no intention to sell their shares," it said, adding it believed the decision should have been made through an open discussion at board level. UC RUSAL, which has three representatives of Norilsk's nine-person board, has demanded the re-election of the board because it believes it to be controlled by Interros. Potanin owns a stake of about 30 percent in Norilsk. Norilsk, however, insisted shareholders would benefit from the buyback. "In the last three years, the shareholders of Norilsk Nickel received more than $8 billion as a result of stock buybacks or buyouts, and in the form of dividends," Norilsk First Deputy General Director Alexander Popov said in the statement. "The share buyback will be conducted in accordance with best corporate governance practices, in an absolutely transparent manner ensuring equal access for all shareholders," he said. The shares that Norilsk buys back will be held as treasury shares on the company's balance sheet. (Writing by Robin Paxton; Editing by David Cowell)