Completion of the Transaction is subject to a number of conditions, including shareholder approval.
'The Board, the Special Committee and the management team of the Group are set to deliver on our commitment to restore shareholder value and re-set Polymetal's strategy by selling the Russian business of the Group. A quick, transparent, and sanctions-compliant exit under the terms of the proposed Transaction serves the interests of all stakeholders. The completion of the divestment will allow the Group to de-risk the Company's business, deliver stable cash flows and pursue new investment opportunities. The Board recommends shareholders to vote for the proposed resolution', said
The Transaction will result in the Company focusing on its operations in
On
Completion is subject to certain conditions precedent, including receipt of required regulatory approvals and shareholder approval. The Company anticipates that Completion will occur by the end of
Key terms
The Transaction will be effected through a sale of 100 per cent. of the share capital of JSC Polymetal ('Polymetal Russia') to JSC Mangazeya Plus (the 'Purchaser'). The Transaction values the Russian business at approximately
All payments under the Transaction will be in Russian roubles through non-sanctioned financial institutions.
Based on the above, the net after-tax cash proceeds from the Transaction receivable by the
The Transaction with the Purchaser includes several important provisions that go a long way to meet the Company's goals of achieving a quick, clean and sanctions-compliant exit from its Russian operations in a manner which assures the commercial efficiency of processing Kyzyl concentrate into gold dore bars. In particular:
The agreement includes provisions for the continued use of the Amursk POX processing facility (a subsidiary of Polymetal Russia) to treat Kyzyl refractory concentrate (the 'Tolling Agreement') until the Ertis POX in
The Special Committee continues to engage with the
The Company has provided the Purchaser with title and capacity warranties only, thus minimizing any exposure to potential warranty claims.
The Transaction Agreements comply, and performance thereof will comply, with all Sanctions Laws and Russian Sanctions, and the Purchaser is not subject to any sanctions.
The Transaction values Polymetal Russia at 5.3x EV/EBITDA based on Adjusted EBITDA of Polymetal Russia for the 12 months ended
Rationale for the Transaction
The Board considers that the Transaction presents the most viable opportunity for the Group to restore shareholder value by removing or substantially mitigating critical political, legal, financial and operational risks to the
The announcement of the Transaction is the result of a review initiated by the Board following the commencement of the
The Board, together with the Special Committee (which was established to ensure full and comprehensive compliance with US sanctions and to develop appropriate responses) and external legal counsel, undertook a strategic process to review all possible options in respect of Polymetal Russia in order to restore value for Polymetal shareholders and de-risk its ongoing operations.
The Board believes the current structure of the Group continues to expose the Company to unacceptable levels of risk associated with its Russian operations and risks full destruction of value of Polymetal Russia to Shareholders. The main considerations on which the Board has focused include:
material risk of nationalization or other form of property expropriation of Polymetal Russia by the Russian Government;
material risk of disruption of the Tolling Agreement given the loss of managerial control and operational oversight over Polymetal Russia;
material risk of claims by Polymetal Russia against the Group for full settlement of the Intra-group Debt;
the restricted ability of the Company to access international finance markets and to maintain relationships with service providers and customers and the restricted ability to pursue corporate actions for the benefit of Shareholders.
Furthermore, for so long as the Designation is in force and the Company has material exposure to
Therefore, the expedited divestment, as contemplated by the Transaction, is essential for:
de-risking the ongoing operations and restoring the Company's access to international financial markets;
restoring and preserving shareholder value, including the elimination of discounts that are applied in the international capital markets to '
Due to the extreme difficulty and related uncertainty of executing any alternative transaction, and the very material risk that the current structure poses to the Group, the Board, with the support of the Special Committee, considers that the Company's divestment of Polymetal Russia, as proposed by the terms of the Transaction, presents Shareholders with the preferred outcome to preserve value within the
The Board and the Special Committee each considers that the Transaction and the passing of the Resolution are in the best interests of the Company and the Shareholders taken as a whole. Accordingly, the Board recommends that Shareholders, to the extent they are able to do so, vote in favour of the Resolution to be proposed at the General Meeting.
The Purchaser
The Purchaser is JSC Mangazeya Plus, an entity established for the purpose of the Transaction by
As at the date of this announcement, and so far as the Company is aware based on due diligence, neither the Purchaser nor the founder and owner have been designated under EU,
If Completion occurs, the
It will comprise the following producing assets with the total Ore Reserve base estimated at 11.3 Moz of
Kyzyl: this consists of the Bakyrchik open-pit mine and flotation plant. Underground mining is expected to begin from 2030;
Varvara hub: this consists of the Varvara and Komarovskoye open-pit mine, the Baksy deposit and the Varvara processing plant and Ertis POX project: a new POX facility that will be built in Pavlodar,
In 2023, the
After Completion, the
General Meeting
Despite the Company not being obliged to seek shareholder approval under the AIFC MAR rules or any applicable regulatory requirements applicable to the
The General Meeting will be held at 11:00 a.m. (Astana Time) on Thursday
Voting will commence shortly after publication of this announcement.
Further details of the ways to vote and Notice of General Meeting can be found in the Circular.
The vote of Shareholders is important. If the Resolution is not passed, the Transaction will not go ahead and the current structure of the
Shareholders are advised to consult their own legal advisers on compliance with sanctions to which they may be subject or of which they may be unaware as to the application of such sanctions in connection with the Transaction. In particular, to ensure compliance with US sanctions, Shareholders who are US persons should not exercise their vote in respect of the Resolution.
Shareholder Circular
The Circular describes the background to, and reasons for, the Transaction, and explains why the Board, with the support of the Special Committee, considers the Transaction to be in the best interests of the Company and Shareholders as a whole and recommends that Shareholders, to the extent they are able to do so, vote in favour of the Resolution. Shareholders are urged to read the Circular as a whole and its entirety.
Analyst & Investor Briefing
The Company will be hosting an Analyst and Investor Briefing webcast today at 15:00 Astana time (
At the event,
To join the webcast please follow the link: https://streamstudio.world-television.com/CCUIv3/login.aspxticket=1451-2739-39090&target=en
Webcast participants will be able to ask questions via live chat. A recording of the event will be available at the webcast link above and on the Company's website soon after the event.
About polymetal
Contact:
Tel: +7.7172.476.655
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