OREANDA-NEWSOn Thursday, May 16, the Board of Directors of LUKOIL recommended that the annual meeting, which will be held in a month, decide to reduce the authorized capital of the company, redeeming 35 million of its 750 million shares, or about 4.7%. This is stated in the message of the company received by the Russian media. On this news, the LUKOIL paper on the Moscow Stock Exchange jumped 4.6%, the company's capitalization increased by about 180 billion rubles. and reached 3.92 trillion rubles. (at 14.10 Moscow time).

We are talking about the redemption of shares that Lukoil Securities Limited’s subsidiary of LUKOIL bought on the stock exchange, including in the form of depositary receipts, as part of the buyback program since September 2018. This program is calculated until the end of 2022 and assumed the redemption of securities in the amount of up to $ 3 billion. But then the company decided to accelerate and complete the redemption as early as 2019, declared on November 29, the first vice-president of LUKOIL Alexander Matytsyn. “Based on how much the company earned this year, we decided to speed up the buyback program,” he explained. At the end of 2018, LUKOIL's net profit under IFRS increased by one and a half times, to 619.2 billion rubles (about $ 10 billion).

According to Interfax, the company has already spent more than $ 2.5 billion on the buyback, acquiring 4.32% of the shares.

The redemption of shares bought out during the buyback is quite expected news, ACRA analyst Vasily Tanurkov told RBC that LUKOIL representatives said that they would put out such shares and due to this the amount of dividends on the outstanding shares will increase. In addition to the proportional growth of dividends, the repayment of shares is good news, because it will increase the share of LUKOIL shares traded on the stock exchange (free-float), the expert added. As a result of the buyback of the company's shares, the share of free-float has declined, so the weight of LUKOIL securities in the MSCI index has recently been reduced, which led to a drop in prices, the expert concluded.

The largest shareholders of LUKOIL are the president of the company Vagit Alekperov (owns 26.06%) and his deputy Leonid Fedun (together with his family controls 9.78%). After repaying 35 million shares, the shares of Alekperov and Fedun will rise to 27.33% and 10.26%, respectively, Tanurkov calculated.