Severstal buying 17% of quasi-treasury shares from Nordgold split-off
MOSCOW. Feb 29 (Interfax) - Severstal confirmed its intention to cancel 170 million or 17% out of the approximately 193 million Severstal treasury shares currently held by Lybica Holding B.V., a wholly owned subsidiary of Severstal, and obtained in the process of the Nordgold separation, Severstal aid in a statement.
"As previously communicated, 170 million Severstal treasury shares now held by Lybica will be transferred to Severstal treasury for cancellation. In order to facilitate this transfer and cancellation, Russian JSC law requires that Severstal's Board of Directors convene an Extraordinary General Meeting of shareholders (EGM) to approve a resolution for Severstal to acquire 170 million Company shares through the legal procedure of a public cash tender offer (the "Offer"). The proposed Offer price is RUB 390 per share, based on the average mid-market closing price for the Severstal shares over the 120 days to 24 February 2012.
The EGM of Severstal will be held on 10 April 2012. If a majority of shareholders approve the resolution, it is anticipated that the Offer will be open for acceptances from 21 May 2012 to 19 June 2012 with settlement expected in early July 2012. The Offer is open to all eligible shareholders. To the extent that more than 170 million Severstal shares are tendered by Lybica and by any Severstal shareholders, acceptances will be pro-rated.
Lybica will tender all of its Severstal shares (including GDR) into the Offer. These would suffice to satisfy the Offer in full. To the extent that Alexey Mordashov, Severstal's CEO and majority shareholder, participates in the Offer, directly or indirectly, he has committed to transfer all of his pro rata allocation rights (81.4%) in favour of Lybica. Correspondingly, Alexey Mordashov will not receive any cash as a result of the Offer nor will he reduce his ownership in the Company."
Uralsib Capital analyst Dmitry Smolin said in an analytical note that he thought Mordashov's stake might participate if Severstal's share prices falls below 390 rubles during the share purchase period, when arbitrage might be possible with Severstal's shares.
The majority stake might have to be tendered to achieve a ratio at which the necessary amount of shares can be bought from Lybica - the law states a company cannot selectively purchase only a quasi-treasury stake and that it is obliged to accept all tenders. A company cannot forecast the market price of shares during the tender period, Severstal's deputy CEO, finance and economics, said during a conference-call. "If any of the minority shareholders wants to tender [shares for purchase] at such a price, they would be pro-rated," he said.
"The cancellation [of the purchased shares] will technically take place at the beginning of July, I think, judging by our planned schedule," Kulichenko said. "We realize that the quasi-treasury shares do not participate in the final distribution of dividends so for the first quarter we'll plan to pay based on the stakes of minority shareholders and he main shareholder," he said.
Severstal's statement quoted Chris Clark, Chairman of Severstal's Board of Directors, as saying: "At the time of Nordgold separation Severstal committed to cancel the vast majority of the Company shares owned by Lybica. The Offer enables Severstal to follow through on this commitment."
Severstal said on November 30 that it was splitting off its gold production division and this should be completed by January 2012. On November 30 it was announced that Nordgold shares would be swapped for Severstal GDR and shares. The register for shareholders taking part in the deal was closed the day before. The exchange will have a ratio of 186 Nordgold (preliminarily consolidated at a ratio of 2:1) for 100 Severstal shares. If there is sufficient agreement from minority shareholders to acquire 5% of Nordgold capital, the gold producer would apply for the GDR listing on the LSE. Nordgold was valued at $2.8 billion, going by Severstal's share price when the split-off was announced.
It was anticipated that, as a result of the minority and majority exchanges, Lybica would receive Severstal shares and/or GDRs equal to approximately 192.9 million or 19.14% of Severstal's total issued shares outstanding. It was intended that 30 million Severstal shares (2.98% of issued shares) and/or GDRs acquired by Lybica pursuant to the exchanges would continue to be owned by Lybica and would be used for general corporate purposes (voting with them at Severstal shareholders meetings was not planned). It was further intended that the remaining shares and/or GDRs (approximately 162.9 million) acquired by Lybica pursuant to the Exchanges would be transferred to Severstal treasury and cancelled in due course.
