Evraz Plc (EVR) - Acquisition of Raspadskaya
RNS Number : 9084N
04 October 2012
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
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Acquisition of an indirect controlling interest inOJSC Raspadskaya by EVRAZ
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
· 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
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
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:
London: +442078328990 Moscow: +74952321370
VP, Corporate Communications
London: +442078328998 Moscow: +74959376871
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
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
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
MSCEZLBBLBFEFBB -0- Oct/04/2012 06:00 GMT
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