Save on taxes: how Potanin explained the idea to collect 50% of "Norilsk Nickel"

The largest shareholder of Norilsk Nickel explained that if he had combined the packages with other co-owners, they would have saved: the tax on dividends is not paid when holding more than 50%. But the partners refused.
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Savings on taxes

Vladimir Potanin, the president of Norilsk Nickel, who recently increased his stake in the company to 34% (through a number of companies), having bought 1.5-1.6% on the market, and who intends to continue to increase his stake, explained that one of his goals - Savings on taxes on dividends. He stated this on May 15 at a hearing in the High Court of London, which considers the lawsuit of Norilsk Nickel's second largest shareholder, UC Rusal, Oleg Deripaska (27.8%), who disputes the terms of the sale of shares of the third shareholder - Crimber Roman Abramovich and Alexander Abramov. RBC has a transcript of the court session. Its authenticity was confirmed by RBC one of the participants in the trial.

Under Russian law, an individual or legal entity is exempt from dividend tax if it owns more than 50% of the company, Potanin explained in court.

According to Art. 284 of the Tax Code, a legal entity that owns more than 50% of shares or interests in another Russian company pays, or does not pay, a profit tax on dividends paid at a rate of 0%, Anatoly Yushin of the law office Yushin and Partners explained.

The businessman said that, being a major shareholder of Norilsk Nickel, he earned a "fairly large amount of funds" on dividends, which he would like to reinvest into the company, as he believes in it and devotes a lot of his time to it.

He also explained that he now pays tax on dividends received at a rate of 5-13%, depending on the type of securities (shares or ADRs) and jurisdictions where the companies through which he owns shares of Norilsk Nickel are registered. For 2017, Potanin received about $ 890 million in dividends from Norilsk Nickel. Thus, $ 44.5-116 million was spent on paying taxes, Maxim Khudalov, the director of the corporate ratings group of ACRA, estimated.

According to Aleksey Bashkirov, Deputy Director for Investments of Interros (managing assets of Potanin), who testified in court on May 16, tax exemption is subject to the condition that money remains in Russia and will be reinvested in the company.

According to Potanin, he suggested to other shareholders of Norilsk Nickel, Deripaska and Abramovich, to merge the packages into the company in order to receive over 50% only for reasons of economy: they would not have to pay taxes on dividends together. At the same time, they did not talk about the redemption of their securities, it follows from the testimony of a businessman. When exactly he made such an offer, Potanin did not specify.

Answering the question of the lawyer Deripaska in court, whether he pursues the goal of gaining control in Norilsk Nickel, Potanin answered in the negative. He explained that his goal is a "good investment" and the revenue from it in the form of dividends and a rise in the value of securities.

But the head of Norilsk Nickel added that it is preferable to buy shares from existing shareholders rather than from the market, because this, among other things, allows maintaining high liquidity on the stock exchange: now the free float of Norilsk Nickel is about 34%. According to him, Deripaska, being the largest shareholder of UC Rusal, understood his motives, since he himself suggested to another shareholder of UC Rusal - Viktor Vekselberg to sell his stake in this company to increase his stake, while maintaining the level of free float.

But the partners were unable to convince, Potanin said. (Vekselberg also did not sell Deripaska a stake in UC Rusal, but, on the contrary, in February 2018 increased its stake to 26.5%, buying shares from ONEXIM Mikhail Prokhorov.)

Another option that Potanin discussed with Deripaska in the summer of 2017 - the transfer of shares of Norilsk Nickel owned by UC Rusal, in direct ownership of the shareholders of the aluminum company - Deripaska, Vekselberg and Prokhorov. After that Potanin expected to unite the packages in Norilsk Nickel with Vekselberg and Prokhorov for the same purposes of saving on taxes, and then, perhaps, and buy back their share, the businessman admitted. Since Deripaska rejected the idea of ​​merging Norilsk Nickel with UC Rusal, the latter did not make sense to own the shares first, argued Potanin. But this proposal was rejected, it follows from his testimony.

A representative of UC Rusal declined to comment.

Way to control

London Court on Monday, May 14, considering the merits of the suit UC Rusal, which disputes the terms of sale of 4% of Norilsk Nickel. The defendants on it are Whiteleave Vladimir Potanin and Crispian. In the framework of preliminary hearings, the parties have already agreed that the basic shareholders of the company - Whitеleave and UC Rusal - proportionally buy this package. In mid-March, Whitеleave, according to the agreement in court, acquired 2.1% of Crispian for $ 778 million, but Deripaska, having acquired the right to buy 1.9%, called the declared price of securities inflated (for its package, she had to pay about $ 700 million ), and the deal itself - forced: according to UC Rusal, in the event of the sale of the entire Potanin package, the balance between the main shareholders of the company will be violated.

For Potanin, as he said, it was a big surprise that Deripaska sued.

Potanin, testifying in court, also told that he offered a fee to Deripaska for refusing the preemptive right to buy out a share of shares from Crispian in order to be able to buy out the maximum possible package from Abramovich and Abramov's structure, which owned 6.3% of Norilsk Nickel. In this case, the head of Norilsk Nickel would have to offer a smaller premium to the seller and easier to borrow money from banks.

When Potanin realized that UC Rusal still intends to purchase 1.9% from Crispian, he started buying up shares on the open market, which turned out to be even cheaper for him than if he had bought additional papers from Abramovich and Abramov, the businessman said. court.

According to Bashkirov, deputy director of investments for Interros (he manages Potanin's assets), Potanin bought shares of Norilsk Nickel on the market amid falling quotations due to the imposition of sanctions by the Ministry of Finance against UC Rusal and Deripaska.

To buy up shares of Norilsk Nickel, Potanin attracted $ 1.5 billion from banks, explaining to potential creditors that an increase in the stake in the company is his strategic interest and his structures have enough free shares of Norilsk Nickel that banks can use as collateral. After the deal with Abramovich and Abramov, Potanin had $ 722 million left, which, based on the current quotations of Norilsk Nickel on the London Stock Exchange, he could buy about 2.6% more.

Potanin, even without borrowing money to buy shares in banks, only at the expense of the dividends he receives from Norilsk Nickel may well bring his stake in Norilsk Nickel before the control even before the end of the shareholder agreement between the company's main co-owners, that is, until 2022, Kirill Chuiko, head of the analytical department of BCS. According to his calculations, in this case a businessman can buy up about 3% of the shares on the market annually. His desire to save on taxes is understandable, but unlikely to please the state, the analyst adds.