Kazakhmys Calls Aug. 2 Shareholder Vote on ENRC Founders’ Offer

Kazakhmys Plc (KAZ) set Aug. 2 as the date for shareholders to vote on the sale of its 26 percent stake in Eurasian Natural Resources Corp. to ENRC (ENRC)’s three founding shareholders and the Kazakh government.

Alexander Machkevitch, Patokh Chodiev and Alijan Ibragimov are seeking to take ENRC private and have offered shareholders $2.65 in cash and 0.23 of Kazakhmys stock for each share. Kazakhmys, Kazakhstan’s biggest copper producer, has said it backs the bid. Investors will vote on the proposal in London, Kazakhmys said in a statement today.

The founders are seeking to take ENRC off the market five years after selling shares at 540 pence apiece in a London initial public offering. The stock has dropped about 27 percent this year amid allegations of corruption at its operations in Kazakhstan and Africa. ENRC mines iron ore, produces ferroalloys used in steelmaking, generates power in Kazakhstan and extracts metals in Africa.

The bidders, who formed Eurasian Resources Group BV, said June 24 their offer for ENRC is equivalent to 234.3 pence a share and values the company at 3.04 billion pounds, ($4.6 billion).

Kazakhmys will receive $887 million and 77 million of its own shares under the offer, and its proportion of freely tradable shares will increase to about 58 percent from about 37 percent, it said June 24. The shares fell 1.9 percent to 252.5 pence by 1:54 p.m. in London.

Eurasian Resources said in a separate statement that if Kazakhmys passes the necessary resolutions at the shareholder meeting, it will post its offer document to ENRC investors by Aug. 7.

An independent committee of ENRC directors said June 24 it is “very disappointed” by the offer and can’t recommend it. The stock dropped 0.6 percent to 208.6 pence by 1:50 p.m.

The U.K.’s Serious Fraud Office said April 25 it began an investigation into alleged fraud and bribery at London-based ENRC operations, including in the Democratic Republic of Congo. The company is “cooperating fully in the reporting process with the SFO,” ENRC Chief Executive Officer Felix Vulis said May 9.

To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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