Evraz Plc EVR Acquisition of Raspadskaya

  Evraz Plc (EVR) - Acquisition of Raspadskaya

RNS Number : 9084N
Evraz Plc
04 October 2012




NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
 ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
                          LAWS OF SUCH JURISDICTION

 Acquisition of an indirect controlling interest inOJSC Raspadskaya by EVRAZ
                                     plc



4 October 2012 - EVRAZ plc (LSE:  EVR) ("EVRAZ") announces that it has  agreed 
the terms  of the  acquisition of  an indirect  controlling interest  in  OJSC 
Raspadskaya and its subsidiaries ("Raspadskaya") (the "Acquisition").

· EVRAZ  has  agreed  to  purchase  a  further  50%  interest  in  Corber 
Enterprises Limited  ("Corber") from  Adroliv Investments  Limited, a  company 
owned by  the  sellers  (the  "Sellers"),  which  holds  an  82%  interest  in 
Raspadskaya. EVRAZ has  an existing holding  of 50% of  Corber and,  following 
completion of  the Acquisition,  will  hold an  indirect  interest of  82%  in 
Raspadskaya's shares. The  remaining 18% of  Raspadskaya's shares will  remain 
listed on the Russian Stock Exchange, MICEX-RTS.

·  As  consideration   for  the   Acquisition,  EVRAZ   will  (i)   issue 
132.7million new  shares  representing  9.9% of  the  existing  issued  share 
capital of  EVRAZ  (the  "New  EVRAZ Shares");  (ii)  issue  33.9million  new 
warrants to subscribe for  33.9 million new shares  representing 2.53% of  the 
existing issued share  capital of EVRAZ  (the " Warrants"),  and (iii) pay  an 
amount, in cash, of  US$1,949.80 for each of  103,600 ordinary Corber  shares, 
payable in four equal instalments in Q1, Q2, Q3 2013 and Q1 2014. The Warrants
may be exercised at any time between 12 months and 15 months after  completion 
of the Acquisition and the  Warrants contain customary provisions relating  to 
adjustments. Upon exercise of  the Warrants, it is  expected that the  Sellers 
would own 11.06% of EVRAZ.

· Completion of the Acquisition is  expected to occur in Q42012  subject 
to receipt of  customary regulatory  approvals and satisfaction  or waiver  of 
other conditions.

· Raspadskaya is one of Russia's  largest producers of coking coal  based 
on volume of production in 2011 and  is located in the Kemerovo region of  the 
Russian Federation. Raspadskaya is already a key supplier of coal to EVRAZ and
EVRAZ is Raspadskaya's largest customer.

· According to the international consulting  firm IMC, as of 31  December 
2011, the total proved and probable coal reserves of Yuzhkuzbassugol,  EVRAZ's 
producer of  coking  coal,  were estimated  to  be  approximately  632million 
tonnes. As of 31 December 2011,  according to IMC, Raspadskaya had proved  and 
probable coal reserves of 1,314million tonnes.

· EVRAZ's net leverage ratio as at  30 June 2012 was 2.48x. Corber's  net 
debt at 30June 2012 was US$330million and the pro forma net leverage of  the 
combined entity as at this date would have been 2.39x.

Alexander Frolov, CEO, EVRAZ plc, said,

"The acquisition will  increase EVRAZ's  coking coal  self-coverage, which  is 
consistent with EVRAZ's  stated strategy of  growth in the  raw materials  for 
steelmaking.

Raspadskaya is  already  a  key  supplier  of  coal  to  EVRAZ  and  EVRAZ  is 
Raspadskaya's  largest  customer.  Through  holding  an  equity  interest   in 
Raspadskaya since 10  March 2004  and having directors  on the  Board of  OJSC 
Raspadskaya, EVRAZ has a clear understanding of the strengths and potential of
Raspadskaya's business and  is best  positioned to benefit  from acquiring  an 
indirect controlling interest in Raspadskaya.

Following completion  of  this  acquisition  EVRAZ  will  become  the  largest 
producer of  coking  coal  in  Russia. We  believe  that  the  acquisition  of 
Raspadskaya  will  generate  substantial   operational  synergies  to   EVRAZ, 
including the optimal use of different coal grades in the combined portfolio.

We value the strong expertise of the management team and we are happy that  Mr 
Kozovoy, who  has  been  the  chief executive  officer  of  Raspadskaya  since 
December 1993, and  has successfully helped  to transform it  into one of  the 
largest coal mining companies in Russia,  will stay in this position until  at 
least the end of 2013."

Summary of the Conditions to the Acquisition

The Acquisition is subject  to certain conditions and  other terms, which  are 
summarised below, and completion will only  occur if, among other things,  the 
following events occur  on or before  15 January  2013 or such  later date  as 
EVRAZ and Raspadskaya agree:

a) EVRAZ  having received  pre-transfer merger  clearance from  the  Russian 
Federal Antimonopoly Service in connection with the Acquisition;

b) the  share prices  of  EVRAZ or  Raspadskaya  not falling  below  certain 
pre-agreed levels; and

c) satisfaction or  waiver of certain  other conditions, including,  without 
limitation, the receipt  of authorisations,  orders, confirmations,  consents, 
clearances,  permissions  or   approvals  required  under   any  law  of   any 
jurisdiction either  without conditions  or subject  to conditions  which  are 
acceptable to EVRAZ (acting reasonably).

On the  basis that  all the  conditions  as outlined  above are  satisfied  or 
waived, the Acquisition is expected to complete in Q42012.

Settlement, Listing and Dealings of the New EVRAZ Shares

The New EVRAZ Shares  issued to the Sellers  pursuant to the Acquisition  will 
rank pari passu in all respects with the EVRAZ shares in existence at the date
of this announcement.

Applications will be made:

· to the UKLA for the New EVRAZ  Shares to be admitted to listing on  the 
Official List; and

· to the London Stock Exchange for the New EVRAZ Shares to be admitted to
trading on the Main Market.



A conference call for investors and analysts to discuss the Acquisition hosted
by Alexander Frolov, CEO, andGiacomo Baizini, CFO, will commence on  Thursday, 
4 October 2012 at:



1:30 pm (London Time)

4:30 pm (Moscow Time)

8:30 am (New York Time)





Conference call dial-in details:



08006940257 in the UK (toll-free)

81080020972044 in Russia (toll-free)

18669669439 in the USA (toll-free)



+44(0)1452555566 International Dial-in



Conference ID36652333



To avoid any technical inconveniences it is recommended that participants
dialin 10 minutes before the event start time.



The conference call playback will be available until 5 October 2012.



Participants requesting the playback should dial:



08717000145 in the UK

18662474222 in the US

+44(0)1452550000 International Dial-in



and enter the Code 36652333followed by the # sign.



The presentation will be available on the Company's website
http://www.evraz.com/investor/presentationsshortly before the call.



For further information:



Investor Relations:
London: +442078328990 Moscow: +74952321370

ir@evraz.com



Media Relations:
Oleg Kuzmin
VP, Corporate Communications
London: +442078328998 Moscow: +74959376871
media@evraz.com



Information on EVRAZ

EVRAZ is  a vertically  integrated steel,  mining andvanadium  business  with 
operations in the  Russian Federation, Ukraine,  USA, Canada, Czech  Republic, 
Italy and South Africa. EVRAZ is among  the top 20 largest steel producers  in 
the world based on crude steel  production of 16.8million tonnes in 2011.  In 
2011 EVRAZ sold 15.5million tonnes  of steel products. A significant  portion 
of the Group's internal consumption of iron ore and coking coal is covered  by 
its mining operations.  As at 31December  2011, according to  IMC, EVRAZ  had 
total proved  and probable  reserves of  approximately 632million  tonnes  of 
coal. During 2011, EVRAZ extracted 6.3million tonnes of raw coking coal,  and 
3.0million tonnes  of raw  steam  coal, and  produced 6.5million  tonnes  of 
coking coal  concentrate and  0.9million tonnes  of steam  coal  concentrate. 
EVRAZ's total assets stood at US$16,975million as at 31December 2011 and  at 
US$17,432million as at 30June 2012.The EBITDA for 2011 was  US$2,898million 
and the H12012 EBITDA was US$1,175million.

Information on Raspadskaya

Raspadskaya is  one of  Russia's largest  producers of  coking coal  based  on 
volume of production in 2011.  Raspadskaya conducts its business through  OJSC 
Raspadskaya and 11 of its key  subsidiaries located in the Kemerovo region  of 
the Russian Federation. Raspadskaya extracted 6.3million tonnes of raw coking
coal and produced 3.8million tonnes of coking coal concentrate in 2011. As of
31December 2011, Raspadskaya had proved and probable coking coal reserves  of 
1,314million tonnes, coking coal  measured resources of 1,809million  tonnes 
and coking coal inferred resources of 262million tonnes, according to IMC.

Corber's total assets stood at US$2,150million as at 31December 2011 and  at 
US$2,078million as at  30June 2012. The  2011 Adjusted EBITDA  for 2011  was 
US$318million and the H12012 Adjusted EBITDA was US$99million.

Raspadskaya's principal coal mining and coal processing operations consist  of 
three  underground  mines,  one  open-pit   mine  and  the  Raspadskaya   coal 
concentrate preparation plant. Raspadskaya's ability to produce large  volumes 
of coking coal concentrate has resulted in many large Russian steel companies,
such as EVRAZ,  MMK, NLMK  and several  other Russian  metallurgical and  coke 
producing  companies  such  as  Koks,  Mechel  and  Urals  Steel,  relying  on 
Raspadskaya to supply their coke producing  plants with a large proportion  of 
the coal products that are  required to operate their businesses.  Raspadskaya 
has its own coal  and coal concentrate  transportation network which  connects 
Raspadskaya's production  complex  to  the  federal  railway  network  at  the 
Mezhdurechensk railway station.

The senior management of Raspadskaya includes (i) Gennady Kozovoy, the current
chief executive officer of Raspadskaya Coal Company who assumed this  position 
in April 2003  and previously  served as Raspadskaya's  general director  from 
December 1993  till June  2003,  and (ii)  Alexander  Vagin, the  chairman  of 
Raspadskaya's board  of  directors  who  has served  in  such  capacity  since 
December 1993 and  assumed the role  of first deputy  CEO of Raspadskaya  Coal 
Company  in  March  2004.  Whereas  MrKozovoy  following  completion  of  the 
Acquisition will remain as Raspadskaya's CEO  until at least the end of  2013, 
MrVagin will  resign  as Chairman  of  Raspadskaya  and leave  its  board  of 
directors but remain with Raspadskaya as deputy CEO.



This announcement is not intended to and does not constitute or form part  of, 
and should not  be construed as,  any offer, invitation  or recommendation  to 
purchase, sell or subscribe for any securities in any jurisdiction and neither
the issue of  the information  nor anything  contained herein  shall form  the 
basis of or  be relied upon  in connection with,  or act as  an inducement  to 
enter into, any  investment activity.  This announcement does  not purport  to 
contain all of the information that may be required to evaluate any investment
in EVRAZ, Raspadskaya or any of their securities and should not be relied upon
to form the  basis of, or  be relied on  in connection with,  any contract  or 
commitment or investment decision whatsoever. This announcement is intended to
present background information on EVRAZ,  Raspadskaya, their business and  the 
industries in  which they  operate and  is not  intended to  provide  complete 
disclosure upon which an investment decision in respect of, or other  response 
to the Acquisition, could be made.

This announcement does  not constitute a  prospectus or prospectus  equivalent 
document.

The release, publication or distribution of this announcement in jurisdictions
other than  the  United  Kingdom  may  be restricted  by  the  laws  of  those 
jurisdictions, and therefore persons  into whose possession this  announcement 
comes should  inform  themselves  about and  observe  any  such  restrictions. 
Failure to comply with any such restrictions may constitute a violation of the
securities laws of any such jurisdiction.

This announcement has been prepared for the purposes of complying with English
law and the information disclosed may not be the same as that which would have
been disclosed if this announcement had  been prepared in accordance with  the 
laws and regulations of any jurisdiction outside of England.

No regulatory clearance in respect of the  New EVRAZ Shares has been, or  will 
be, applied for in any jurisdiction other than the UK.

The  New  EVRAZ  Shares  may  not  be  offered,  sold,  resold,  delivered  or 
distributed, directly or  indirectly, in,  into or from  Australia, Canada  or 
Japan or to,  or for the  account or  benefit of, any  resident of  Australia, 
Canada or Japan absent  an exemption from registration  or an exemption  under 
relevant securities law.

Notice to US investors

This announcement is not an offer of securities for sale, offer to purchase or
a solicitation of  an offer  to purchase  the shares  of EVRAZ  in the  United 
States.

The New EVRAZ Shares, which will be issued in connection with the Acquisition,
have not been,  and will not  be, registered  under the US  Securities Act  or 
under the securities  law of  any state or  other jurisdiction  of the  United 
States. The New EVRAZ Shares may not  be offered or sold in the United  States 
absent registration under the  US Securities Act or  pursuant to an  exemption 
from, or in a transaction not subject to, the registration requirements of the
US Securities Act.

Cautionary Note Regarding Forward-Looking Statements

This announcement contains certain forward-looking statements with respect  to 
the financial  condition, results  of  operations and  business of  EVRAZ  and 
Raspadskaya and certain plans  and objectives of  EVRAZ with respect  thereto. 
These forward-looking statements can  be identified by the  fact that they  do 
not relate only  to historical  or current  facts. Forward-looking  statements 
often use words such as "anticipate", "expect", "estimate", "intend",  "plan", 
"goal",  "believe",  "hope",  "aims",  "continue",  "will",  "may",  "should", 
"would", "could",  or other  words of  similar meaning.  These statements  are 
based on assumptions and assessments made by EVRAZ and/or Raspadskaya in light
of their  experience  and  their  perception  of  historical  trends,  current 
conditions, future developments and other factors they believe appropriate. By
their nature, forward-looking statements involve risk and uncertainty, because
they relate  to events  and depend  on circumstances  that will  occur in  the 
future and  the  factors described  in  the context  of  such  forward-looking 
statements in this  document could  cause actual results  and developments  to 
differ materially from those expressed  in or implied by such  forward-looking 
statements. Although it is  believed that the  expectations reflected in  such 
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been  correct and you are therefore  cautioned 
not to place undue  reliance on these  forward-looking statements which  speak 
only as at the  date of this document.  Neither EVRAZ nor Raspadskaya  assumes 
any obligation to update or correct the information contained in this document
(whether as a result of new  information, future events or otherwise),  except 
as required by applicable law.

There  are  several  factors  which  could  cause  actual  results  to  differ 
materially from  those expressed  or  implied in  forward-looking  statements. 
Among the factors that  could cause actual results  to differ materially  from 
those described in the forward-looking  statements are changes in the  global, 
political, economic,  business,  competitive, market  and  regulatory  forces, 
future exchange and interest rates, changes  in tax rates and future  business 
combinations or dispositions.



                     This information is provided by RNS
           The company news service from the London Stock Exchange

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