TIDMEVR
RNS Number : 0056E
Evraz Plc
03 May 2017
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN
3 May 2017
EVRAZ PLC enters into agreement to dispose of Joint Stock
Company Evraz Nakhodka Trade Sea Port to Lanebrook Limited
EVRAZ plc ("EVRAZ", the "Company" and together with its
subsidiaries, the "Group") announces today that it has signed an
agreement to dispose of the entire issued share capital of its
fully owned subsidiary Joint Stock Company EVRAZ Nakhodka Trade Sea
Port (the "Nakhodka Port") to its majority shareholder Lanebrook
Limited ("Lanebrook") for consideration of US$354.4 million (the
"Transaction"). As part of the Transaction, the Company and
Nakhodka Port have also entered into a transhipment agreement (the
"Transhipment Agreement"), pursuant to which the Group has agreed
to supply and Nakhodka Port has agreed to tranship cargoes of coal
and metals in specified volumes and at specified tariffs for a
period of five years.
Transaction highlights
-- Financially and strategically attractive transaction enabling
EVRAZ to further optimise its asset portfolio and focus on its core
business by divesting a non-core asset and realising value for it
today.
-- The consideration of US$354.4 million (which is comprised of
$339.7 million in respect of the sale of the shares of Nakhodka
Port, the repayment of debt net of working capital adjustments and
the payment of dividends from the Nakhodka Port to the Group) will
generate US$295 million of net proceeds for EVRAZ (after deductions
of applicable taxes, transaction fees and other related costs). The
Transaction proceeds will principally be applied to reduce the
outstanding indebtedness of the Company, thereby improving its
overall financial position by reducing leverage.
-- The Transaction removes the medium-term risks to EVRAZ of
owning a stevedoring company, including the market risks associated
with the potential over-supply of stevedoring capacities in the Far
East of Russia as a result of new projects being implemented over
the next several years as announced by several industry players,
the costs of ensuring compliance with environmental requirements,
and the exposure to potential capital expenditure costs to upgrade
Nakhodka Port's equipment.
-- The Transhipment Agreement secures the continuity of
transhipment services provided by the Nakhodka Port to EVRAZ for
the next five years.
As a result of Lanebrook's 63.79 per cent. holding in EVRAZ,
Lanebrook is considered a related party and the Transaction has
been classified as a related party transaction and a Class 2
transaction for the purposes of the UK Listing Rules (the "Listing
Rules"). Accordingly, the Transaction is subject to approval by the
Company's independent shareholders at a general meeting, which will
take place on 23 May 2017.
Completion of the Transaction is expected to occur by 15 June
2017.
Sir Michael Peat, Senior Independent Non-Executive Director of
EVRAZ, said:
"The independent directors of EVRAZ unanimously believe the
strategic rationale for the disposal of the Nakhodka Port is
compelling, allowing for the realisation of value for the port now,
whilst at the same time securing transhipment capacity for the
Company for the next five years. The independent directors believe
this Transaction will be financially beneficial to EVRAZ, enabling
the Company to continue making further progress with its focus on
reducing indebtedness."
Information on the Nakhodka Port
The Nakhodka Port is one of the largest stevedoring companies in
the Far East of Russia, which is connected to all points of the
Eurasian continent by rail, assisting in both directions in the
flow of goods between Asia and Europe. EVRAZ acquired 91% of its
share capital in 2003, with the remainder acquired in 2007. The
port has a daily capacity to unload up to 500 rail wagons
containing various cargoes, and in the year ended 31 December 2016
the port handled approximately 10 million tons of cargo.
The port's main customers are EVRAZ and Sibuglemet. For the year
ended 31 December 2016, the EVRAZ Group accounted for approximately
66 per cent. and Sibuglemet accounted for approximately 22 per
cent. of the Nakhodka Port's total throughput. For the year ended
31 December 2016, the Nakhodka Port had gross assets of US$50.3
million and net income of US$44.5 million.
The following individuals are deemed by the Company to be key to
the operation of the Nakhodka Port:
Name of individual Position
-------------------- ------------------------
Vyacheslav Saraev Chief Executive Officer
Tatyana Kamysheyeva Finance and Economics
Director
Sergey Pronin Commercial Director
Information on Lanebrook, the related party transaction and
General Meeting
As at 28 April 2017 (the latest practicable date prior to this
announcement), Lanebrook controlled 63.79 per cent. of the ordinary
shares of the Company and accordingly is considered a related party
under the Listing Rules.
In addition, the Company's Directors, Alexander Abramov,
Alexander Frolov and Eugene Shvidler (together, the "Related Party
Directors") are also shareholders of Lanebrook, through which they
are the ultimate beneficial holders of 21.38 per cent., 10.68 per
cent. and 3.09 per cent. respectively of the ordinary shares in the
Company as at 28 April 2017 (the latest practicable date prior to
this announcement).
Accordingly, as a result of being classified as a related party
transaction under the Listing Rules, the Transaction is subject to,
and conditional upon, the approval of the Company's shareholders
excluding Lanebrook and the Related Party Directors (the
"Independent Shareholders") at the General Meeting that will be
held on 23 May 2017 at 10 a.m. at the offices of Clifford Chance
LLP, 10 Upper Bank Street, London, E14 5JJ. Notice of the General
Meeting and the Form of Proxy will be sent to the Company's
shareholders today, 3 May 2017. Lanebrook, the Related Party
Directors and their respective associates are not permitted to vote
at the General Meeting in relation to the Transaction.
The board of directors of the Company (the "Board"), which has
been so advised by Morgan Stanley & Co. International plc
("Morgan Stanley"), acting in its capacity as sponsor, considers
that the terms of the Transaction are fair and reasonable as far as
the Company's shareholders are concerned. In giving its advice,
Morgan Stanley has taken account of the Board's commercial
assessment of the Transaction.
The Board considers the Transaction to be in the best interests
of the Company's shareholders as a whole. Accordingly, the Board
recommends that the Independent Shareholders vote in favour of the
ordinary resolution, as each of the Directors (save for the Related
Party Directors who, in accordance with the Listing Rules, have not
taken part in the Board's consideration of this matter) intends to
do in respect of their own entire legal and beneficial
holdings.
For further information:
Media Relations:
London: +44 207 832 8998 Moscow: +7 495 937 6871
media@evraz.com
Investor Relations:
Irina Bakhturina
Director, Investor Relations
London: +44 207 832 8990 Moscow: +7 495 232 1370
ir@evraz.com
Morgan Stanley (Financial Advisor/ Sponsor/ Corporate
Broker)
Andrew Foster +44(0) 207 425 8000
Sam Barnett
IMPORTANT NOTICE
Morgan Stanley, which is authorised by the Prudential Regulation
Authority (the "PRA") and regulated by the FCA and the PRA in the
United Kingdom, is acting as sponsor and joint financial adviser to
EVRAZ plc and no one else in connection with the Transaction. In
connection with such matters, Morgan Stanley, its affiliates and
their respective directors, officers, employees and agents will not
regard any other person as their client, nor will they be
responsible to anyone other than EVRAZ plc for providing the
protections afforded to clients of Morgan Stanley nor for providing
advice in connection with the Transaction, the contents of this
document or any matter referred to herein.
Apart from the responsibilities and liabilities, if any, which
may be imposed upon Morgan Stanley or Bank of America Merrill Lynch
("BofA Merrill Lynch") by the FSMA or the regulatory regime
established thereunder, Morgan Stanley and BofA Merrill Lynch do
not accept any responsibility whatsoever or make any representation
or warranty, express or implied, concerning the contents of this
document, including its accuracy, completeness or verification, or
concerning any other statement made or purported to be made by
them, or on their behalf, in connection with the Company and the
Transaction, and nothing in this document is, or shall be relied
upon as, a promise or representation in this respect, whether as to
the past or future. Morgan Stanley and BofA Merrill Lynch
accordingly disclaim, to the fullest extent permitted by law, all
and any responsibility and liability whether arising in tort,
contract or otherwise (save as referred to herein) which either of
them might otherwise have in respect of this document or any such
statement.
This announcement may include projections and other
"forward-looking" statements within the meaning of applicable
securities laws. These forward looking statements are subject to a
number of risks and uncertainties, many of which are beyond the
Company's control and all of which are based on the Directors'
current beliefs and expectations about future events. In some
cases, these forward-looking statements can be identified by the
use of forward-looking terminology, including the terms "believes",
"expects", "intends" or "will" or, in each case, their negative or
other variations or comparable terminology.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance.
Forward-looking statements contained in this announcement apply
only as at the date of this announcement. To the extent required by
the Listing Rules, the Transparency Rules (being those made under
Part 6 of the Financial Services and Markets Act 2000, as amended,
and as set out in the FCA's Handbook), the Disclosure Requirements
(being the requirements of articles 17, 18 and 19 of the EU Market
Abuse Regulation) and any other applicable regulations, the Company
will update or revise the information in this announcement.
Otherwise, the Company undertakes no obligation publicly to update
or revise any forward looking statement, whether as a result of new
information, future developments or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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