TIDMZZZZ TIDMEVR
RNS Number : 2581Q
Evraz Plc
17 October 2011
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
17 October 2011
EVRAZ plc ("New Evraz" or the "Company")
Recommended share exchange offer by EVRAZ plc to acquire up to
100% of the issued and outstanding share capital of Evraz Group
S.A. ("Existing Evraz"), to effect a re-domiciliation of Existing
Evraz and its subsidiaries (the "Group")
Overview
New Evraz is pleased to announce that it has today launched a
recommended share exchange offer (the "Offer") to acquire up to the
entire issued and to be issued share capital of Existing Evraz (the
"Existing Shares"), including those Existing Shares represented by
GDRs (the "Existing GDRs" and, together with the Existing Shares,
the "Existing Securities") in exchange for ordinary shares in New
Evraz (the "New Shares").
The Offer is being made in connection with the proposed
re-domiciliation of the Group to the United Kingdom by the
introduction of New Evraz, a public limited company incorporated in
England and Wales, as the new holding company for the Group (the
"Re-domiciliation"). New Evraz intends to apply for admission of
the New Shares to the Premium Listing segment of the Official List
of the UK Financial Services Authority ("FSA") and to trading on
the main market for listed securities of the London Stock Exchange
(together "Admission"), and upon completion of the Offer, New Evraz
will become the parent company of the Group. Admission is expected
to occur on or around 7 November 2011. Morgan Stanley and Credit
Suisse are acting as joint sponsors to the Company in connection
with Admission.
Rationale for the Offer
The Existing Evraz board of directors (the "Existing Evraz
Board") and the New Evraz board of directors (the "New Evraz
Board") agree that completion of the Offer and the Re-domiciliation
will result in the most appropriate structure for the Group. The
Existing Evraz Board believes that establishing New Evraz as the
parent company of the Group and listing it on the Premium segment
of the Official List has many benefits for the Group and its
stakeholders including:
-- raising the profile of the Group with international
investors;
-- increasing the liquidity of its securities;
-- allowing the Group to become eligible for inclusion in the
FTSE UK Index Series (including the FTSE 100 Index) from December
2011; and
-- further demonstrating the Group's commitment to the high
governance standards according to which it operates its
business.
The Offer
Subject to applicable securities laws, the Offer is being made
to eligible existing holders of Existing Shares (including those
represented by Existing GDRs) on the following basis:
for each Existing Share: 9 New Shares
for each Existing GDR*: 3 New Shares
-------------
*three Existing GDRs represent one Existing Share.
For the avoidance of doubt, no cash offer for the Existing
Securities is being made.
The Offer is expected to close at 8.00 a.m. (New York time)/12
noon (UK time) on 4 November 2011 (the "Expiration Time"), with
Admission and unconditional trading in the New Shares expected to
commence on 7 November 2011. Further details regarding the timing
of the Offer are set out in Appendix 1.
Existing GDR holders should note that the respective clearing
systems in which they hold Existing GDRs will each establish its
own cut-off date and time for the submission of instructions by
Existing GDR holders wishing to participate in the Offer, which
will be earlier than the Expiration Time. Further, if an Existing
GDR holder wishes to give an instruction to accept the Offer with
respect to Existing GDRs that are registered in the name of a
broker or other securities intermediary, the Existing GDR holder
must contact that securities intermediary to instruct them to give
an instruction to accept the Offer on its behalf; any such
securities intermediary will establish an earlier deadline than the
Expiration Time by which it must have received an instruction to
accept the Offer on the Existing GDR holder's behalf. Further, the
Existing GDR holder may be charged a fee by such securities
intermediary for processing the instruction to accept the Offer on
its behalf.
The Offer will lapse unless all the conditions (summarised
below) have been fulfilled or waived (if capable of waiver) or,
where appropriate, have been determined by New Evraz to be or
remain satisfied, by 7.00 p.m. (New York time)/12.00 midnight
(London time) on 28 November 2011.
The Offer will not result in any changes to the day-to-day
operations of the business or strategy of the Group.
Irrevocable undertakings to accept the Offer
Lanebrook Limited ("Lanebrook"), which currently holds
103,975,315 Existing Shares and 10,594,581 Existing GDRs, which,
when taken together, represent approximately 72.25 per cent. of the
issued and outstanding Existing Shares (excluding Existing Shares
held in treasury), has irrevocably undertaken to accept or procure
the acceptance of the Offer in respect of its Existing Shares
(including those represented by the Existing GDRs) on the terms
described below (the "LanebrookIrrevocable").
Lanebrook's undertaking to accept or procure the acceptance of
the Offer is conditional upon New Evraz having received, or being
entitled to receive, valid acceptances which, when aggregated with
the acceptance which Lanebrook is required to provide pursuant to
the Lanebrook Irrevocable, equal at least 95 per cent. of the
issued Existing Shares (including those represented by the Existing
GDRs). Save with the prior consent of New Evraz, Lanebrook will
only accept, or procure the acceptance of, the Offer in respect of
such number of its Existing Shares (including those represented by
the Existing GDRs) as will entitle Lanebrook to receive the maximum
number of New Shares to be issued under the terms of the Offer that
Lanebrook may hold whilst at least 25 per cent. of the New Shares
(or such lower percentage as the FSA may approve from time to time)
are held or, subject to the satisfaction by New Evraz of its
obligations under the Offer, are to be held, in public hands for
the purposes of the UK Listing Rules. If the Offer becomes or is
declared wholly unconditional, Lanebrook will remain the majority
shareholder of the Group.
The Lanebrook Irrevocable will lapse if an offer is made for the
Existing Securities by a third party and such offer is recommended
by the Existing Evraz Board.
Termination of Deposit Agreement and De-listing
If the Offer becomes or is declared wholly unconditional, and
sufficient acceptances under the Offer are received and/or
sufficient Existing Shares (including those represented by the
Existing GDRs) are otherwise acquired, the Group intends to
terminate the existing deposit agreement relating to the Existing
GDRs (the "Deposit Agreement") and apply for the cancellation of
the listing of the Existing GDRs on the Official List and for the
cancellation of trading of the Existing GDRs on the London Stock
Exchange.
Settlement of the Offer will lead to reduced liquidity in and
market value of the Existing Shares and the Existing GDRs.
De-listing will reduce significantly the liquidity and
marketability of any Existing GDRs in respect of which the Offer
has not been accepted. If the Deposit Agreement is terminated, the
depositary (the "Depositary") will give notice to the holders of
the Existing GDRs that cancellation of the facility will occur. If
a holder of the Existing GDRs does not request delivery to it of
the Existing Shares underlying its Existing GDRs within the time
specified by the Deposit Agreement, such Existing Shares will be
sold on behalf of the Existing GDR holder by the Depositary and the
net proceeds of sale returned to the relevant Existing GDR holder
upon the surrender of its Existing GDRs and the deduction of a
cancellation fee of US$0.05 per Existing GDR. If an Existing GDR
holder surrenders its Existing GDRs and requests delivery of the
Existing Shares underlying its Existing GDRs, the relevant Existing
GDRs will be cancelled and a cancellation fee of US$0.05 per
Existing GDR will be incurred by the Existing GDR holder. This
cancellation fee will not be payable by Existing GDR holders who
exchange their Existing GDRs for New Shares pursuant to the Offer
as the Group has agreed to pay the fee on their behalf.
The measures and processes described above in connection with
the termination of the Deposit Agreement may or may not be
implemented, subject to applicable provisions of UK and/or
Luxembourg law and regulation. Existing Evraz will make an
announcement in due course in accordance with the terms of the
Existing GDRs if such measures and processes are to be
implemented.
The Board of New Evraz and Governance
The New Evraz Board consists of the Non-Executive Chairman
(Alexander Abramov), one Executive Director (Alexander Frolov) and
seven Non-Executive Directors (Duncan Baxter, Karl Gruber, Sir
Michael Peat, Olga Pokrovskaya, Terry Robinson, Eugene Shvidler and
Eugene Tenenbaum). Sir Michael Peat is the senior independent
Non-Executive Director.
The Company regards all of its Non-Executive Directors other
than Alexander Abramov, Olga Pokrovskaya, Eugene Shvidler and
Eugene Tenenbaum as independent Non-Executive Directors within the
meaning of "independent" as defined in the UK Corporate Governance
Code and free from any business or other relationship which could
materially interfere with the exercise of their independent
judgement.
As at the date of this announcement, the New Evraz Board
includes four independent Non-Executive Directors, meaning that at
least half of the members of the Board (excluding the Chairman)
will be independent Non-Executive Directors in compliance with the
UK Corporate Governance Code. The Company regards this as an
appropriate board structure.
In addition, the Company is currently considering the
appointment of an additional independent non-executive director and
intends to appoint such person, if identified, prior to the
Company's next annual general meeting.
The Directors are committed to high standards of corporate
governance and have established an audit committee, a remuneration
committee, a nominations committee and a health, safety and
environment committee.
Recent Trading
Existing Evraz released its H1 trading update on 12 October
2011.
Existing Evraz has today also released a production update in
respect of Q3 2011. The full text of this update can be found in
the Prospectus.
Dividend Policy
The New Evraz Board intends to adopt a dividend policy which
will take into account, and depend upon, the profitability of the
business and underlying growth in earnings of the Group, as well as
its ongoing capital requirements and cash flows, the availability
of funds and other relevant factors.
Following Admission, in the absence of unforeseen circumstances
and assuming the Group's performance continues in line with the New
Evraz Board's expectations, New Evraz will target to maintain a
long-term average dividend payout ratio of at least 25 per cent. of
the consolidated net profit calculated in accordance with IFRS and
adjusted for non-recurring items, for the relevant period. New
Evraz may only pay dividends if distributable reserves are
available for the purpose.
Existing Evraz declared both an interim and special dividend in
respect of its performance for H1 2011. Details can be found in its
H1 results release, published on 12 October 2011.
Conditions of the Offer
The Offer is conditional upon, among other things:
(i) valid acceptances of the Offer being received by not later
than 8.00 a.m. (New York time)/12 noon (London time) on the Closing
Date (or such later time(s) and/or date(s) as New Evraz may decide)
in respect of not less than 95 per cent. (or such lower percentage
as New Evraz may decide) in nominal value of the Existing Shares
and of the voting rights attached to those Existing Shares,
provided that this condition will not be satisfied unless New Evraz
(together with its wholly owned subsidiaries) shall have acquired
or agreed to acquire (whether pursuant to the Offer or otherwise)
Existing Shares carrying in aggregate more than 95 per cent. of the
voting rights then normally exercisable at a general meeting of
Existing Evraz, including for this purpose any such voting rights
attaching to Existing Shares that are unconditionally allotted or
issued before the Offer becomes or is declared unconditional as to
acceptances whether pursuant to the exercise of any outstanding
subscription or conversion rights or otherwise (the "Acceptance
Condition"). For the purposes of the Acceptance Condition, Existing
Shares which have been unconditionally allotted but not issued
before the Offer becomes or is declared unconditional as to
acceptances, whether pursuant to the exercise of any outstanding
subscription or conversion rights or otherwise, shall be deemed to
carry the voting rights they will carry upon issue; and
(ii) the New Shares being admitted to the Premium Listing
segment of the Official List and being admitted to trading on the
London Stock Exchange's main market for listed securities or, if
New Evraz and Existing Evraz so determine, the UKLA having
acknowledged to New Evraz or its agent (and such acknowledgement
not having been withdrawn) that the application for admission of
the New Shares to the Premium Listing segment of the Official List
has been approved and (subject to the satisfaction of any
conditions to which such approval is expressed) will become
effective as soon as a dealing notice has been issued by the FSA
and an acknowledgement by the London Stock Exchange that the New
Shares will be admitted to trading on the London Stock Exchange's
main market for listed securities (and such acknowledgement not
having been withdrawn).
Immediately upon the Offer becoming or being declared wholly
unconditional, each Existing Security holder will effectively have
the same proportionate direct or indirect interest in the Group as
they had immediately prior to the Offer becoming or being declared
wholly unconditional.
The Offer will be subject to the terms and conditions set forth
in the exchange offer document containing the Offer (the "Offer
Document"). The Offer is conditional on certain matters (including
Admission), each of which may be waived by New Evraz at any time,
in whole or in part, in its sole discretion.
The Offer Document is expected to be published today. In
addition, a prospectus relating to Admission prepared in accordance
with the Prospectus Rules of the UK Listing Authority approved by
the FSA in accordance with section 85 of the Financial Services and
Markets Act 2000 (the "Prospectus") is expected to be published on
or around the date hereof. The Offer Document and the Prospectus
will be made available when published to eligible participants on
the Group's website (www.evraz.com).
Other
The terms and conditions of Existing Evraz's outstanding debt
securities will remain unchanged.
The New Shares will be denominated in U.S. dollars and will be
quoted in pounds sterling on the London Stock Exchange. Dividends
in respect of the New Shares, if any, will be declared and paid in
U.S. dollars, although holders of New Shares will be able to elect
to receive their dividend payments in pounds sterling or Euros,
based on the exchange rates in effect at the date of such
election.
Recommendation
The Board of Evraz Group S.A. is pleased to have agreed the
details of the Offer as, having given due and careful consideration
to the strategic and financial rationale of the proposed
transaction, it believes that the Offer is in the best interests of
Existing Evraz, the holders of Existing Securities and all other
stakeholders in Existing Evraz.
The Directors of Evraz Group S.A. unanimously recommend that
holders of the Existing Securities, including Existing GDRs, accept
the Offer or give instructions to accept the Offer, as they intend
to do (or procure to be done) in respect of their own beneficial
holdings of, in aggregate, 60,139,955 Existing Shares (including
Existing Shares represented by Existing GDRs), representing (as at
12 October 2011, being the latest practicable date prior to the
publication of the Offer Document) approximately 40.42 per cent. of
the existing issued and outstanding share capital of Existing Evraz
(excluding Existing Shares held in treasury), subject to the terms
of the Lanebrook Irrevocable in relation to the relevant Directors
of Existing Evraz.
Commenting on the Offer, Alexander Abramov, Non-Executive
Chairman of EVRAZ plc and Evraz Group S.A., said:
"The proposed re-domiciliation of the Group to the United
Kingdom and Premium listed Status is a very important step in our
development. During the last 6 years as a company listed on LSE we
have made enormous progress in our business, both organically and
through M&A. Our strategy of vertical integration has proved
successful both in strong and turbulent markets and we see a lot of
opportunities for growth in Russia and internationally. The Premium
Listing and anticipated FTSE inclusion are intended to increase the
attractiveness of the Group's shares to a broader universe of the
highest quality investors in the UK, Europe and globally and to
provide the capital markets platform and profile to help the Group
to achieve its strategic objectives. We are also delighted to
welcome Sir Michael Peat to the Board as Senior Independent
Director as another step in our ongoing commitment to the highest
standards of corporate governance and we are considering the
addition of another independent non-executive director ahead of the
Company's next AGM."
Conference Call
Evraz Group S.A. will hold a conference call at 1pm (London
time) today to discuss the share exchange offer and also update on
Q3 production. Details of the call are:
Toll Free Numbers:
Standard International +44 (0) 1452 560 063
Austria 0800 111 948
Denmark 8088 4404
France 0805 111 342
Germany 0800 101 3108
Ireland 1800 931 682
Israel 1809 203 674
Italy 8009 064 86
Norway 8001 5837
Russia 8108 0020 972 044
Spain 8000 991 79
Sweden 0200 887 531
Switzerland 0800 000 097
UK 0800 953 0820
USA 1866 437 8387
Conference ID: 18474912
Encore Replay Access Number: 18474912#
International Dial in: +44 (0) 1452 55 00 00; UK Free Call Dial
In: 0800 953 1533; UK Local Dial In: 0845 245 5205; USA Free Call
Dial In: 1866 247 4222
TO JOIN THE WEBCAST PLEASE REGISTER AT:
http://webeventservices.reg.meeting-stream.com/20111017_MorganStanley/
Enquiries:
Morgan Stanley & Co. International plc +44 (0) 207 425 8000
(Joint Sponsor to the Company)
Gergely Voros
Alastair Cochran
Doug Campbell
Credit Suisse Securities (Europe) Limited +44 (0) 207 888 8888
(Joint Sponsor to the Company)
James Leigh-Pemberton
Anush Simonyan
Chris Byrne
Investor contact:
Alexander Boreyko Director, Investor Relations +7 495 232 1370
ir@Evraz.com
Media contact:
Oleg Kuzmin VP, Corporate Communications +7 495 937 6871
media@Evraz.com
Evraz Group S.A. is a vertically integrated steel, mining and
vanadium business with operations in the Russian Federation,
Ukraine, USA, Canada, Czech Republic, Italy and South Africa. In
2010, Evraz Group S.A. produced 16.3 million tonnes of crude steel
and sold 15.5 million tonnes of steel rolled products. Evraz Group
S.A.'s internal consumption of iron ore and coking coal is covered
by its mining operations. Evraz Group S.A.'s consolidated revenues
for the year ended 31 December 2010 were US$13,394 million and
consolidated adjusted EBITDA amounted to US$2,350 million.
This press release is an advertisement and not a prospectus and
investors should not subscribe for any shares or other securities
referred to in this press release except on the basis of
information in the Offer Document and the Prospectus to be
published by the Company in due course in connection with the
admission of the shares or other securities to the Official List of
the Financial Services Authority. Copies of the Offer Document and
the Prospectus will, following publication, be available to
eligible participants on the Group's website (www.evraz.com). This
press release does not constitute or form part of any offer or
invitation to sell or issue, or any solicitation of any offer to
purchase or subscribe for, any shares or other securities of the
Company, nor shall any part of it nor the fact of its distribution
form part of or be relied on in connection with any contract or
investment decision relating thereto, nor does it constitute a
recommendation regarding the securities of the Company.
Some of the information in this press release may contain
projections or other forward-looking statements regarding future
events or the future financial performance of the Company. You can
identify forward-looking statements by terms such as "expect,"
"believe," "anticipate," "estimate, " "intend," "will," "could,"
"may" or "might", the negative of such terms or other similar
expressions. These statements are only predictions and actual
events or results may differ materially. The Company does not
intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. Many factors could cause the
actual results to differ materially from those contained in the
Company's projections or forward-looking statements, including,
among others, general economic conditions, its competitive
environment, as well as many other risks specifically related to
the Company and its operations.
The information contained herein does not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any
sale of the securities referred to herein in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration, exemption from registration or qualification under
the securities laws of any jurisdiction. The securities referred to
herein may not be offered, or sold in the United States absent
registration under the US Securities Act of 1933 (the "Securities
Act") or another exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act.
These materials and information contained herein are not a
public offer or advertisement of securities in Russia, and are not
an offer, or an invitation to make offers, to purchase, sell,
exchange or transfer any shares whether in the form of shares or
global depositary receipts ("GDRs") in Russia. This information is
not intended to be and must not be publicly distributed in the
Russian Federation and is not intended to and must not be sent to
persons who are not qualified investors under Russian law. No
shares or GDRs have been or will be registered in Russia or are
intended for placement or public circulation in Russia.
These materials and information contained herein do not
constitute an offer of securities and nothing herein shall be read
or construed as constituting investment advice or
recommendations.
Each of Credit Suisse Securities (Europe) Limited and Morgan
Stanley & Co International plc are acting for the Company and
no one else in connection with Admission and will not be
responsible to anyone other than the Company for providing the
protections afforded to clients of Credit Suisse Securities
(Europe) Limited and Morgan Stanley & Co International plc or
for providing advice in relation to the contents of this
announcement or any matters referred to herein.
The Offer is being made in reliance on, and in compliance with,
Rule 14d-1(c) under the US Securities Exchange Act of 1934. The
Offer is being made for securities of a non-US company. The Offer
is subject to disclosure requirements of the United Kingdom and
these are different from those of the United States. Financial
statements, if any, included in the documents relating to the Offer
have been prepared in accordance with International Foreign
Reporting Standards that may not be comparable to the financial
statements of United States companies. The payment and settlement
procedures with respect to the Offer will comply with the relevant
United Kingdom rules, which differ from United States payment and
settlement procedures. In accordance with normal United Kingdom
market practice, New Evraz or any person acting on their behalf may
from time to time make certain market or private purchases of, or
arrangements to purchase, directly or indirectly, Existing
Securities other than pursuant to the Offer. Any information about
such purchases will be publicly announced as required by law or
regulation in the United Kingdom and United States.
New Evraz is organised under the laws of England and Wales and
Existing Evraz is organised under the laws of Luxembourg. Some or
all of the officers and directors of New Evraz and Existing Evraz,
respectively, are residents of countries other than the United
States. In addition, most of the assets of New Evraz and Existing
Evraz are located outside the United States. As a result, it may be
difficult for US shareholders to enforce their rights and any claim
they may have arising under the US federal securities laws, since
New Evraz is located in a foreign country, and some or all of its
officers and directors may be residents of foreign countries. US
shareholders may not be able to sue a foreign company or its
officers or directors in a foreign court for violations of the US
securities laws. It may be difficult to compel a foreign company
and its affiliates to subject themselves to a US court's
judgement.
You should be aware that New Evraz may purchase securities
otherwise than under the Offer, such as in the open market or
privately negotiated purchases.
In accordance with Rule 14e-5(b) of the Exchange Act, during the
Offer Credit Suisse Securities (Europe) Limited and Morgan Stanley
& Co International plc and certain of their respective
affiliates may act as exempt principal traders in GDRs of Existing
Evraz on the London Stock Exchange. These purchases may occur
either in the open market or as privately negotiated transactions.
No information about these purchases will be publicly disclosed
unless required by applicable law, and if so required, information
about these purchases will be disclosed to the extent and in the
manner required by applicable law, and in the event of any such
disclosures, such information will be also be made available in the
United States in a manner that is comparable to the disclosure that
is made in compliance with such legal requirements.
Appendix 1
Expected timing of events in relation to the Offer
The times, dates and events shown in this table are subject to
change at the absolute discretion of EVRAZ plc
Event Day
Offer Document published 17 October 2011
-----------------------------------
Prospectus published On or around 17 October 2011
-----------------------------------
Evraz Group S.A. announces Q3 17 October 2011
production update
-----------------------------------
Offer period commences 17 October 2011
-----------------------------------
Offer period closes (unless 4 November 2011 at 12 noon (London
extended) time)
-----------------------------------
Final acceptances announced On or about 4 November 2011
-----------------------------------
Admission and commencement of 7 November 2011 at 8am (London
unconditional dealings time)
-----------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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