Friday, November 4, 2011

Update on Norilsk Nickel

After two harrowing weeks of waiting for the tender to go through, I am pleased to report that the cash finally hit all three of my accounts this morning. While there was much skepticism on whether the tender would go through (not least by yours truly!), I am actually surprised at how seamlessly the process transpired. Save for some concerns that the government would review the tender (at the behest of Rusal, who stood to lose the most from it going through), there were really no major hiccups to report. The Company closed the tender as expected on October 28th, announced the results on Nov 2nd, and started distributing funds last night.

As I indicated in my previous post, the biggest concern I had was that the tender would attract so much interest that there would be an oversubscription by odd-lot holders (i.e. those holding less than 1,000 ADRs). However, the proration factor turned out to be nearly 11% vs. the Company’s intention to purchase 7.7% of its shares outstanding. As such, there was never really any threat of odd-lot holders not getting paid out in full.

Based on the handful of comments I received on the post, it sounds like there are some fortunate individual investors who decided to hold their nose and take the plunge on an attractive risk reward. Congrats to all and let’s hope we can get in the middle of another fight between a pair of Russian oligarchs in the near future!

For all those interested, here is a great article ("Bread Line or Stock Sale") from the wall street journal that shows the difficulty most Russians faced in tendering their shares. Unlike us fortunate Americans who simply had to place a 3 minute call to instruct our broker to tender our shares, most Russians had to tender their shares in person. The article talks about the massive "bread" lines of people that formed to take advantage of the "once in a lifetime" offer. Unfortunately, many they didn't make the October 28th cutoff.


  1. Wow, Lumpy you got paid in all 3 accounts. You the man. I now learned something new. I got paid in 2 accounts, one mine and one my wife. Good luck.

  2. yeah, i have an etrade account, a separate IRA account w/ ameritrade, and my wife has an account with Schwab. got hit in all three with no problems (not to say I wasn't white knuckeling it!). I figured even if I only got my tender accepted in one account, I would still be fine given how insensitive the stock appeared to be to the announced tender. Given the stock is still comfortably above $19/share, that view seems to have been validated. hey 50% upside and perhaps 10% downside - you really can't beat those odds, particularly when you consider the high likelihood the Company was going to push forward on the tender.

  3. We did good. I saw your post about gold on 11/11/2009. Great call. Hope you profited from gold.

    Do you have any thoughts about NLY. Are you familiar with Annaly. It is paying about a 15% dividend, excellent ceo. I do not trade often. I owm dividend stocks and reinvest the dividends. Any thoughts on good dividend stocks. KMP has been a big winner for me, keep reinvesting the dividends. Any thoughts?