Polymetal agrees to sell Russian business to Mangazeya, expects to close deal by end of March
MOSCOW. Feb 19 (Interfax) - Silver and gold miner Polymetal International has entered into an agreement to sell its Russian business, as represented by JSC Polymetal, to Mangazeya Plus, a division of Sergei Yanchukov's Mangazeya Group.
The transaction values the Russian business at about $3.69 billion, including $2.21 billion in net debt, Polymetal International said in a press release. The effective total consideration will also include a dividend of $1.429 billion paid by JSC Polymetal to Polymetal International, of which $278 million will be retained by the latter for its general corporate purposes and $1.151 billion will be used to fully repay intra-group debt; and $50 million in cash paid by the purchaser.
The completion of the transactions is subject to certain conditions precedent, including regulatory approvals and shareholder approval. The company said it anticipates the deal will be closed by the end of March 2024.
Polymetal shareholders will hold a meeting on March 7 to vote on approving the deal.
Based on the above terms, Polymetal's net after-tax cash proceeds from the transaction are expected to be $300 million. The board of directors plans "to use the proceeds to finance the Ertis POX development project and to improve the Company's liquidity profile."
If the board approves the project in the second half of 2024, the Ertis POX will be launched in 2028. The deal with Mangazeya includes provisions for the continued use of the Amursk POX processing facility, a subsidiary of JSC Polymetal, to treat Kyzyl refractory concentrate under a tolling agreement until the Ertis POX in Kazakhstan is online.
The Russian business will continue to be managed by its current team led by CEO Sergei Cherkashin, the buyer said.
"We intend to support current management in the implementation of strategic goals to preserve the stability of the business. All enterprises will continue to operate as usual and obligations to the government, local communities, creditors, partners and employees will be met in full," Yanchukov was quoted as saying in a statement from JSC Polymetal.
Mangazeya Plus was established for the purpose of the transaction by Mangazeya Mining, a top-15 Russian gold miner operating in Transbaikal Territory. Mangazeya Group also has interests in real estate development, agriculture and other businesses.