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Russian gold producer Polyus on Monday said its board had approved a share buyback worth up to 579.4 billion roubles ($6.32 billion) that could boost its financial flexibility for future M&A deals and sent its Moscow-listed securities soaring.
Polyus has decided to delist its depositary receipts from the London Stock Exchange, in part due to US and UK sanctions against the company over Russia’s actions in Ukraine.
Like most Russian firms, it is adjusting to life with diminished access to Western markets and capital.
Polyus is banking on gold prices and increased production underpinning the stability of its financial performance and could turn to merger and acquisition transactions or possible capital markets placements once the buyback is complete.
“The repurchased shares could become an instrument for various M&A deals and project financing, which would be cheaper for the company than borrowing,” a Polyus spokesperson said.
Polyus’ Moscow-listed shares surged around 15% in the minutes after the announcement and were trading up 5.7% as of 1000 GMT.
Polyus said the purchase price of up to 40,802,741 shares was set at 14,200 roubles per piece, representing a premium of approximately 32.56% to their July 7 closing price.
Polyus said its subsidiary, Polyus Krasnoyarsk, would carry out the offer using its own funds and external debt.
“The maximum number of shares that may be purchased represents approximately 29.99% of all outstanding shares,” Polyus said.
“The company would like to preserve the liquidity of shares, but the size of the free float will be determined after the fact,” the spokesperson said.
($1 = 91.6575 roubles)
(By Anastasia Lyrchikova, Alexander Marrow and Caleb Davis; Editing by Mark Trevelyan and Jason Neely)
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