TIDMKZG TIDMPLZL
RNS Number : 6948I
KazakhGold Group Ltd
17 June 2011
For immediate release 17 June 2011
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN OR INTO CANADA, AUSTRALIA, JAPAN OR THE RUSSIAN
FEDERATION, OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF RELEVANT LAWS OR REQUIRE REGISTRATION
THEREOF
This document is not a prospectus but an advertisement.
Investors should not subscribe for any transferable securities
referred to in this announcement except on the basis of information
in the prospectus which will be published shortly in accordance
with the Prospectus Directive and made available on the KazakhGold
website, www.kazakhgold.com
PROPOSED COMBINATION
of
KAZAKHGOLD GROUP LIMITED
and
OJSC POLYUS GOLD
The Board of KazakhGold Group Limited ("KazakhGold") and OJSC
Polyus Gold ("Polyus Gold") are pleased to announce the proposed
combination of KazakhGold and Polyus Gold (the "Proposed
Combination"), which, if completed, would result in KazakhGold
acquiring all or substantially all of the issued share capital of
Polyus Gold, currently the indirect controlling shareholder of
KazakhGold.
The Proposed Combination, if completed, will create a single
holding company listed on the London Stock Exchange owning the
businesses of both KazakhGold and Polyus Gold, thereby unifying the
shareholder bases of the respective companies.
Background
On 9 July 2009, Polyus Gold, through its indirect wholly-owned
subsidiary, Jenington International Inc. ("Jenington"), made a
recommended partial offer to acquire 50.1% of the issued and to be
issued share capital of KazakhGold (the "Partial Offer"). The
Partial Offer was declared unconditional on 14 August 2009. As part
of the Partial Offer, Jenington also agreed to underwrite the USD
100 million equity capital raising of new KazakhGold Shares which
was placed with Jenington and a number of qualified investors on 1
July 2010(the "Placing"). Accordingly, Jenington now owns 65% of
the issued share capital of KazakhGold.
Since acquiring its interest in KazakhGold in 2009, Polyus Gold
has managed KazakhGold and, through Jenington, has funded the
development and operations of KazakhGold through two USD 50 million
shareholder loans in 2009 and 2010 as well as a further aggregate
USD 10.675 million loaned in 2011.
On 30 June 2010, the Board of KazakhGold announced a proposed
combination of KazakhGold and Polyus Gold, which would have
resulted in KazakhGold acquiring all or substantially all of the
issued share capital of Polyus Gold (the "2010 Proposed
Combination"). The 2010 Proposed Combination was terminated on 26
October 2010, following the announcement by the Ministry of
Industry and New Technologies of the Republic of Kazakhstan
("MINT") that it annulled the prior decisions of the competent
authorities in Kazakhstan granting waivers of the state's
pre-emptive right to acquire KazakhGold securities, including the
waivers obtained for the 2010 Proposed Combination.
On 10 April 2011, KazakhGold and AltynGroup Kazakhstan LLP
("AltynGroup") (a limited liability partnership controlled by
members of the Assaubayev family) entered into a Restated and
Amended Principal Agreement (the "Amended Principal Agreement")
providing for the sale of the shares of KazakhGold's operating
subsidiaries in Kazakhstan, Romania and Kyrgyzstan (the "KazakhGold
Operating Subsidiaries"), for an aggregate consideration of USD 509
million as well as the provision by the buyer of funds required for
KazakhGold to repay USD 62,044,198.05 in outstanding principal
amount of loans advanced by Jenington, together with accrued
interest. The sale, which is subject to a number of conditions, is
to be made in two tranches, with the sale of 51% of KazakhGold's
Operating Subsidiaries to occur by 12 September 2011 and the sale
of the remaining interests to be completed by 31 December 2012.
On 10 April 2011, KazakhGold, Jenington and members of the
Assaubayev family and certain related companies also entered into a
settlement deed which provides for the settlement and release of
all orders, judgments and claims outstanding between them, without
any admission of liability on either part (the "Settlement Deed").
All the conditions to the effectiveness of the Settlement Deed have
been obtained, including the waivers from the MINT of its
pre-emptive rights of KazakhGold securities and the issuance to
KazakhGold of an irrevocable documentary letter of credit for USD
100 million, which is available for drawdown in certain
circumstances, including as partial payment on completion of the
first tranche of the sale of the shares in KazakhGold's Operating
Subsidiaries which is to occur by 12 September 2011 under the terms
of the Amended Principal Agreement.
All governmental and regulatory approvals, consents and waivers
necessary to permit KazakhGold to consummate the Proposed
Combination have been received.
Terms of the Proposed Combination
The Proposed Combination is to be effected through a series of
transactions, including an exchange of new KazakhGold Shares and
GDRs for Polyus Gold common shares and ADSs (represented by ADRs).
Under the terms of the Proposed Combination, the consideration to
be offered to Polyus Securityholders will be as follows:
-- for each Polyus Share: 17.14 KazakhGold GDRs
-- for each Polyus ADS*: 8.57 KazakhGold GDRs
*Every two Polyus ADSs represent one Polyus Share.
In determining the Exchange Ratio, the Board of KazakhGold took
into account, among other things, the relative financial position
of Polyus Gold and KazakhGold, Polyus Gold's operational outlook
and the consideration payable by AltynGroup for KazakhGold's
Operating Subsidiaries.
The Exchange Ratio was determined based on the following assumed
values:
-- each Polyus Share and every two Polyus ADSs of approximately
USD 68.56;
-- each KazakhGold GDR of approximately USD 4.00.
Based on the above assumed values, the Exchange Ratio implies a
value for the existing issued share capital of Polyus Gold of
approximately USD13.1 billion.
On 17 June 2011 the Board of KazakhGold determined that the
Exchange Ratio was fair from a financial point of view so far as
the existing shareholders of KazakhGold were concerned. In arriving
at this determination, the Board of KazakhGold took financial
advice from HSBC Bank plc as financial adviser to KazakhGold.
As part of the Proposed Combination, KazakhGold is creating a
Level I GDR programme which will be similar to the current Polyus
Gold Level I ADR programme.
Intention to delist Polyus Gold ADSs
Following completion of the Proposed Combination, Polyus Gold
intends to apply to the UKLA and the London Stock Exchange to have
the Polyus ADSs delisted from the Official List and from the Main
Market of the London Stock Exchange in accordance with the
respective rules of the Financial Services Authority and the London
Stock Exchange, and Polyus Gold may subsequently terminate its
Level I ADR programme. In such circumstances, any remaining holders
of Polyus ADSs would receive Polyus Shares in exchange for their
Polyus ADSs. If the Proposed Combination does not complete, Polyus
Gold will maintain the listing of the Polyus ADSs on the Official
List and the Main Market.
Reasons for and benefits of the Proposed Combination
The Board of KazakhGold and Polyus Gold believe that the
Proposed Combination will provide substantial benefits to both
Polyus Gold and KazakhGold, as well as holders of their respective
shares and depositary receipts, including:
Creation of a leading gold producer
The Proposed Combination will create one of the leading gold
producers in the world and the largest pure gold mining company
listed on the London Stock Exchange in terms of gold production and
mineral resources. Based on the 2010 annual results for KazakhGold
and Polyus Gold, the Combined Group had aggregate production of
1,386 thousand ounces in 2010, proven and probable reserves of 81.0
million ounces, and measured, indicated and inferred resources of
125.9 million ounces on 1 January 2010 (adding Polyus Gold reserves
and resources as of January 2011 and KazakhGold reserves and
resources as of May 2011, determined in accordance with the JORC
Code at such date).
Strong platform for growth
The Board of KazakhGold and Polyus Gold believe that the
Combined Group will have a strong platform for future growth in
Russia and globally. The Proposed Combination will bring to the
Combined Group the high quality assets of Polyus Gold, including
Olimpiada, Blagodatnoye and Natalka, as well as Polyus Gold's
strong exploration and development portfolio.
Improved financial position for KazakhGold
Since completion of the Partial Offer, the KazakhGold Group has
not been able to generate sufficient cash to service its debt, and
has relied on funding supplied by Jenington to support its debt and
other obligations. Polyus Gold has, through Jenington, funded the
development and operations of KazakhGold through two USD 50 million
shareholder loans, as well as further loans in an aggregate
principal amount of USD 10.675 million loaned in 2011 to fund
interest payments on the Senior Notes and other obligations of
KazakhGold. The KazakhGold Group had a loss in 2010 of USD 57,271
thousand (compared to USD 143,739 thousand in 2009), and had cash
outflows from operations in 2010 of USD 43,886 thousand (compared
to USD 48,987 thousand in 2009). In the absence of the Proposed
Combination, there can be no assurance that further financial
support from Jenington or Polyus Gold will be forthcoming beyond 30
April 2012. If the Proposed Combination is completed, KazakhGold
will be the parent company of the Polyus Group, enabling it, and
indirectly the holders of the GDRs, to benefit from the enlarged
group's operating cash flows and improved liquidity.
Enhanced liquidity and visibility of the Combined Group
The Board of KazakhGold and Polyus Gold believe that, with an
enlarged shareholder base and greater free float in USD terms
following completion of the Proposed Combination, the Combined
Group will benefit from enhanced liquidity in its GDRs, as well as
increasing its visibility in the London equity market, resulting in
a more transparent valuation for the Combined Group going
forward.
Improved access to capital markets
Through the combination with Polyus Gold, the Board of
KazakhGold and Polyus Gold believe that KazakhGold will have a more
stable financial footing and will have access to more reliable
sources of financing on more beneficial terms than those presently
available to it. Polyus Gold is currently subject to limitations
under Russian law on the aggregate number of depositary receipts it
can have in issue, which restricts its capability to raise capital
in the international equity markets and the ability of its
shareholders to convert common shares into depositary receipts. The
Board of KazakhGold and Polyus Gold expect the internationalisation
of Polyus Gold through the combination with KazakhGold to give the
Combined Group the ability to raise capital through a more direct
access to international capital markets.
Enhanced corporate governance
The new board of KazakhGold is expected to have three
independent non-executive directors. As GDR holders of the Combined
Group, existing KazakhGold GDR holders will benefit from enhanced
corporate governance through the appointment of at least two
additional independent non-executive directors, and Polyus
Securityholders will benefit from the appointment of at least one
additional independent non-executive director to the Board of
KazakhGold.
Attractive acquisition currency
The Board of KazakhGold and Polyus Gold believe that the
Combined Group's London Stock Exchange listing will provide an
attractive acquisition currency for future expansion and
consolidation opportunities within the gold sector, both regionally
and globally.
Elimination of multiple trading platforms
The completion of the Proposed Combination will result in a
single, London-listed investment opportunity for investors in the
form of KazakhGold depositary receipts with one unified market
capitalisation, eliminating the multiple trading platforms for
investment in Polyus Gold or KazakhGold securities that currently
exist.
Potential to move to a Premium Listing
Following the integration of the KazakhGold and Polyus Gold
groups, the Combined Group will consider applying in due course to
the UKLA for a Premium Listing of its ordinary shares on the London
Stock Exchange, which would allow the Combined Group to seek future
inclusion in key FTSE indices and which, the Board of KazakhGold
and Polyus Gold believe, would lead to a re-rating of the Combined
Group. Moving to a Premium Listing would also require enhancement
to the corporate governance of the company and provide greater
rights for minority shareholders than KazakhGold's
Jersey-incorporation and Standard Listing presently affords them.
No final determination has been made to apply for a Premium
Listing, and no assurance can be given that such a listing would be
obtained.
Transaction structure
The Proposed Combination will be effected through a series of
conditional transactions (each a "Transaction" and together, the
"Transactions"). A brief description of each Transaction is set out
below:
-- The Private Exchange Offer: KazakhGold will make a private
exchange offer to Eligible Polyus Securityholders to exchange their
Polyus Securities for KazakhGold GDRs on the following basis:
-- for each Polyus Share: 17.14 KazakhGold GDRs
-- for each Polyus ADS*: 8.57 KazakhGold GDRs
*Every two Polyus ADSs represent one Polyus Share.
- The Private Exchange Offer is subject to a number of
conditions, in particular, an acceptance condition of 16% of the
issued and outstanding share capital of Polyus Gold, which, if not
achieved, may result in the Proposed Combination not
completing;
- Other key conditions and details of the Private Exchange Offer
are set out in Section 2 of Appendix II of this announcement.
-- The Principal Shareholders Option Agreement: KazakhGold has
entered into an option agreement with the Principal Shareholders of
Polyus Gold, granting KazakhGold the option to acquire the Polyus
Securities owned by the Principal Shareholders or in which the
Principal Shareholders are otherwise interested, comprising
96,636,443 Polyus Shares and 85,619,611 Polyus ADSs, representing
in aggregate 73.2% of the issued and outstanding share capital of
Polyus Gold, in exchange for KazakhGold Regulation S GDRs, using
the same exchange ratio as is being used in the Private Exchange
Offer
- The exercise of the Principal Shareholders Option Agreement is
subject to several conditions, including satisfaction of the
acceptance condition under the Private Exchange Offer
-- The Jenington Option Agreement: KazakhGold has entered into
an option agreement with Jenington, granting KazakhGold the option
to acquire the Polyus Securities owned by Jenington comprising
10,776,161 Polyus Shares, representing in aggregate, approximately
5.65% of the existing issued share capital of Polyus Gold, in
exchange for KazakhGold Shares, using the same exchange ratio as is
being used in the Private Exchange Offer
- The exercise of the Jenington Option Agreement is subject to
several conditions, including satisfaction of the acceptance
condition under the Private Exchange Offer
The Transactions are described in more detail in Appendix II of
this announcement and full details of the transaction structure
will be set out in the Prospectus to be published shortly.
Following completion of the Private Exchange Offer and the
exercise of the options under the Principal Shareholders Option
Agreement and the Jenington Option Agreement, KazakhGold is
expected to acquire approximately 94.8% of the issued share capital
of Polyus Gold, as a result of which Polyus Gold will become a
subsidiary of KazakhGold. On this basis:
-- existing Polyus Gold shareholders would hold approximately
96.3 per cent. of the Combined Group; and
-- existing KazakhGold shareholders would hold approximately 3.7
per cent. of the Combined Group.
The Transactions, if completed, would constitute a reverse
takeover of Polyus Gold by KazakhGold.
Following completion of the Proposed Combination, subject to
shareholder approval and admission of the new KazakhGold GDRs to
the Official List and to trading on the London Stock Exchange,
KazakhGold will be renamed "Polyus Gold International Limited".
Changes to the Board of KazakhGold
Following completion of the Transactions, it is expected that a
new Board of KazakhGold will be constituted. The composition of the
new Board of Directors is expected to be determined by or shortly
following the completion of the Proposed Combination and will
include members from the current Board, as well as members from the
Board of Directors of Polyus Gold. It is expected that the Board
will include at least three Independent Directors following
completion of the Proposed Combination, including Mr Adrian Coates
and The Earl of Clanwilliam. It is expected that the new Directors
will be appointed by the current KazakhGold Board, as permitted by
the Company's Articles of Association, for terms expiring at
KazakhGold's next Annual General Meeting in 2012.
Further information regarding the new board will be contained in
the Prospectus to be published shortly.
Opinion of the Board of KazakhGold
On 17 June 2011, the Board of KazakhGold determined that the
Exchange Ratio was fair from a financial point of view so far as
the existing shareholders of KazakhGold were concerned. In arriving
at this determination, the Board of KazakhGold took financial
advice from HSBC Bank Plc as financial adviser to KazakhGold.
Support by the Board of Polyus Gold
The Board of Polyus Gold has expressed its support to the terms
of the Proposed Combination, including the Private Exchange
Offer.
Additional information
Additional information on the Proposed Combination can be found
in the appendices to this announcement:
Appendix I: Expected Timing of Principal Events
Appendix II: Further details of the Proposed Combination
Appendix III: Information on KazakhGold and Polyus Gold
The appendices form part of this announcement and must be read
in conjunction with this section.
KazakhGold has prepared a Prospectus, which is expected to be
published shortly, in connection with the issuance of the new
KazakhGold Level I GDRs to be issued in the Private Exchange Offer
and with the admission of such KazakhGold Level I GDRs and of
KazakhGold Regulation S GDRs to the Official List and listing on
the London Stock Exchange. The Prospectus will contain further
information on the Proposed Combination, including the Private
Exchange Offer, the Principal Shareholders Option Agreement and the
Jenington Option Agreement. The Prospectus will also contain
detailed information on both KazakhGold and Polyus Gold.
On 17 June 2011, KazakhGold completed a consent solicitation of
the USD 200 million Senior Notes permitting the Proposed
Combination and the sale of KazakhGold's Operating Subsidiaries to
AltynGroup.
Copies of the Prospectus, when published, will be available for
download from KazakhGold's website at:
http://www.kazakhgold.com/investor/ and will be made available at
KazakhGold's principal place of business at 88 Wood Street, London
EC2V 7RS, United Kingdom.
Commenting on the Proposed Combination, Evgeny I. Ivanov, Chief
Executive Officer and Chairman of the Board of KazakhGold said:
"We are delighted to announce the Proposed Combination of Polyus
Gold and KazakhGold, which will create the largest pure gold
producer listed on the London Stock Exchange with high growth
potential and exciting prospects. We expect the Combined Group to
realise substantial value for the shareholders of both companies
moving forward."
Enquiries:
KazakhGold
Alexey V. Chernushkin, Director, Capital +44 (0) 208 528
Markets and IR 1450
Polyus Gold
Evguenia V.Buydina, IR manager +7 (495) 641 3377
HSBC (financial adviser to KazakhGold)
Sergei Chinkis
Abbas Merali +44 20 7991 8888
This section of the announcement should be read in conjunction
with the full text of the remainder of this announcement. The
expected timing of principal events is set out in Appendix I to
this announcement. Appendix II sets out details of the Proposed
Combination. Appendix III sets out information on KazakhGold and
Polyus Gold and Definitions contains the definitions of certain
terms used in this summary and in the attached announcement.
HSBC Bank plc ("HSBC"), which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting
exclusively for KazakhGold and no one else in connection with the
Proposed Combination and will not be responsible to anyone other
than KazakhGold for providing the protections afforded to clients
of HSBC, nor for providing advice in relation to the Proposed
Combination, the contents of this announcement or any other matter
referred to herein.
General
The release, publication or distribution of this announcement in
jurisdictions other than the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements. This announcement
has been prepared for the purposes of complying with English law
and the information disclosed may not be the same as that which
would have been disclosed if this announcement had been prepared in
accordance with the laws and regulations of any jurisdiction
outside of England.
This announcement is not intended to, and does not constitute,
or form part of, an offer to sell
or an invitation to purchase or subscribe for any securities or
a solicitation of any vote or approval in any jurisdiction. The
terms and conditions of the Private Exchange Offer (as defined
below) will be contained solely in the Private Exchange Offer
Document, and the related Forms of Acceptance and accompanying
documents, as they may be amended or supplemented from time to
time. This announcement does not constitute a prospectus or a
prospectus equivalent document. Investors should not subscribe for
any transferable securities referred to in this announcement except
on the basis of information in a prospectus, which will be
published shortly in accordance with the Prospectus Directive and
made available on the KazakhGold website, www.kazakhgold.com. The
Private Exchange Offer will be made to existing Polyus
Securityholders outside of the Russian Federation, Canada,
Australia and Japan who, under the laws of their jurisdictions, are
permitted to participate in the Private Exchange Offer, and to
certain eligible Polyus Securityholders in the Russian Federation
that are "qualified investors" under Russian law. Eligible Polyus
Securityholders are advised to read carefully the formal
documentation in relation to the Private Exchange Offer once it has
been dispatched. The Private Exchange Offer will be made solely
through the Private Exchange Offer Document and the related Forms
of Acceptance, which will contain the full terms and conditions of
the Partial Exchange Offer.
Neither this announcement nor the information contained therein
is an offer, or an invitation to make offers, sell, purchase,
exchange or transfer any securities or other financial instruments
in the Russian Federation or to or for the benefit of any person in
Russia, and does not constitute and is not purported to constitute
an offering to investors who are not "qualified investors" (as
defined in the Russian Federal Law on the Securities Market) or
advertisement of any securities or other financial instruments in
Russia. This announcement and the information contained therein
must not be passed on to third parties or otherwise be made
publicly available in Russia. Distribution of this document does
not constitute placement and/or public circulation of securities or
other financial instruments in Russia and the Private Exchange
Offer referred to herein does not, and is not intended to,
constitute a public offer in Russia. The depositary receipts of
KazakhGold Group Limited have not been and will not be registered
in the Russian Federation and are not intended for and will not be
admitted to "placement" or "public circulation" in Russia.
Notice to U.S. investors
It is important for U.S. securities holders to be aware that
this announcement is subject to disclosure and regulations in
England that are different from those in the United States. In
addition, U.S. securities holders should be aware that this
announcement has been prepared in accordance with English format
and style, which differs from the U.S. format and style. In
particular the financial information of Polyus Gold included herein
has been prepared in accordance with International Financial
Reporting Standards, and thus may not be comparable to financial
information of U.S. companies whose financial statements are
prepared in accordance with generally accepted accounting
principles in the United States.
The KazakhGold Shares to be represented by the KazakhGold GDRs
have not been and will not be registered under the Securities Act
or the securities laws of any state of the U.S., and may not be
offered, sold, delivered or transferred except pursuant to an
available exemption from or in a transaction not subject to the
registration requirements of the Securities Act and applicable U.S.
state securities laws.
These written materials are not an offer of securities for sale
in the United States. Securities may not be offered or sold in the
United States absent registration or an exemption from registration
under the U.S. Securities Act of 1933, as amended. Any public
offering of securities of the Company to be made in the United
States would be made by means of a prospectus to be obtained from
the issuer or selling security holder and that would contain
detailed information about the Company and management, as well as
financial statements. The Company does not intend to register any
portion of the offering in the United States or conduct a public
offering of the securities in the United States.
The Private Exchange Offer is made for securities of a foreign
company and is subject to disclosure requirements of a foreign
country that are different from those of the United States.
Financial statements included in this Document, if any, have been
prepared in accordance with foreign accounting standards that may
not be comparable to the financial statements of United States
companies.
It may be difficult for U.S. holders of KazakhGold GDRs to
enforce their rights and any claim they may have arising under the
U.S. federal securities laws, since KazakhGold is located in a
foreign country, and some or all of its officers and directors may
be residents of a foreign country. U.S. holders of KazakhGold GDRs
may not be able to sue a foreign company or its officers or
directors in a foreign court for violations of the U.S. securities
laws. It may be difficult to compel a foreign company and its
affiliates to subject themselves to a U.S. court's judgment.
You should be aware that KazakhGold may purchase Polyus
Securities otherwise than under the Private Exchange Offer, such as
in open market or privately negotiated transactions.
No profit forecast
Nothing in this announcement is intended to be, or is to be
construed as, a profit forecast or to
be interpreted to mean that earnings per KazakhGold Share,
KazakhGold GDR, Polyus Gold Share or Polyus Gold ADS for the
current or future financial years, or those of either Polyus Gold
or KazakhGold, will necessarily match or exceed the historically
published earnings per KazakhGold Share, KazakhGold GDR, Polyus
Gold Share or Polyus Gold ADS.
Forward looking statements
This announcement, including any information included or
incorporated by reference, may contain "forward-looking statements"
concerning Polyus Gold, Jenington and KazakhGold. Generally, the
words "will", "may", "should", "could", "would", "can", "continue",
"opportunity", "believes", "expects", "intends", "anticipates",
"estimates" or similar expressions identify forward-looking
statements. The forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in the forward-looking statements.
Forward-looking statements include statements relating to the
following: (i) future capital expenditures, expenses, revenues,
earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects; (ii)
business and management strategies and the expansion and growth of
Polyus Gold, Jenington and KazakhGold operations and potential
synergies resulting from the Proposed Combination; and (iii) the
effects of government regulation on Polyus Gold, Jenington and
KazakhGold's businesses. Many of these risks and uncertainties
relate to factors that are beyond the companies' abilities to
control or estimate precisely, such as future market conditions and
the behaviours of other market participants, and therefore undue
reliance should not be placed on such statements which speak only
as at the date of this announcement. Each of Polyus Gold, Jenington
and KazakhGold assumes no obligation in respect of, and does not
intend to update, these forward-looking statements, except as
required pursuant to applicable law.
Appendix I
Expected timing of principal events
The times, dates and events shown in this table are subject
to change at the absolute discretion of KazakhGold.
DAY EVENT
During the week commencing Private Exchange Offer Document
20 June 2011 and Prospectus expected to be made
available to Eligible Polyus Securityholders
and Private Exchange Offer opens
for acceptance.
14 July 2011 KazakhGold Extraordinary General
Meeting to approve the increase
of KazakhGold's authorised share
capital and other matters.
5.00 p.m., New York Deadline for acceptances of the
City time, on 18 July Private Exchange Offer.
2011 (the "Expiration Please note that, in relation to
Time") Polyus ADSs, each of DTC, Euroclear
and Clearstream will establish their
own earlier deadlines for giving
instructions for accepting the Private
Exchange Offer, which will be earlier
than the Expiration Time.
Please note that Share Forms of
Acceptance relating to Polyus Shares
must be submitted to Computershare
and the transfer of Polyus Shares
to the account of KazakhGold in
the Register must occur by 5.00
p.m., Moscow time, on 18 July 2011.
On or about 18 July Subject to satisfactory acceptances
2011 under the Private Exchange Offer,
KazakhGold intends to exercise the
Options.
19 July 2011 RNS Announcement of the level of
acceptances of the Private Exchange
Offer.
By 25 July 2011 Settlement of the Private Exchange
Offer, the Principal Shareholders
Option Agreement and the Jenington
Option Agreement.
On or about 25 July RNS Announcement of the Private
2011 Exchange Offer, the Principal Shareholders
Option Agreement and Jenington Option
Agreement having completed and admission
of new KazakhGold GDRs to the Standard
Listing segment of the Official
List and to trading on the London
Stock Exchange.
Appendix II
Further details of the Proposed Combination
1. Transaction structure
The Proposed Combination will be implemented through a series of
conditional Transactions which comprise:
-- the Private Exchange Offer;
-- the Principal Shareholders Option Agreement; and
-- the Jenington Option Agreement
The Proposed Combination constitutes, in effect, the reverse
takeover of KazakhGold by Polyus Gold. Each of the Transactions is
subject to conditions that must be satisfied or waived before it
can be completed. Further information on each of the Transactions
will be set out in the Prospectus, to be published shortly.
Following completion of the Private Exchange Offer and the
exercise of the Principal Shareholders Option Agreement and the
Jenington Option Agreement, KazakhGold is expected to acquire
approximately 94.8% of the issued share capital of Polyus Gold, as
a result of which Polyus Gold will become a subsidiary of
KazakhGold. On this basis, more than 30% of the issued share
capital of Polyus Gold would be acquired, and, under Russian law, a
mandatory tender offer in cash for all of the remaining Polyus
Shares would be required. Details of any mandatory tender offer
will be announced at a later stage.
Following completion of the Proposed Combination, subject to
shareholder approval at the Extraordinary General Meeting of
KazakhGold shareholders, and admission of the KazakhGold GDRs to
the Official List of the UKLA and to trading on London Stock
Exchange, KazakhGold will be renamed "Polyus Gold International
Limited".
2. The Private Exchange Offer
KazakhGold will make the Private Exchange Offer to Eligible
Polyus Securityholders to acquire 16% of the issued Polyus
Securities. It is expected that, subject to applicable securities
laws, the Private Exchange Offer will be made to existing Polyus
Securityholders outside of the Russian Federation, Canada,
Australia and Japan who, under the laws of their jurisdictions, are
permitted to participate in the Private Exchange Offer, and to
certain eligible Polyus Securityholders in the Russian Federation,
on the following basis:
-- for each Polyus Share: 17.14 KazakhGold GDRs
-- for each Polyus ADS*: 8.57 KazakhGold GDRs
*Every two Polyus ADSs represent one Polyus Share.
In determining the Exchange Ratio, the Board of KazakhGold took
into account, among other things, the relative financial position
of Polyus Gold and KazakhGold, Polyus Gold's operational outlook,
and the consideration payable by AltynGroup for the KazakhGold
Operating Subsidiaries.
The Exchange Ratio was arrived at based on the following assumed
values:
-- each Polyus Share and every two Polyus ADSs of approximately
USD 68.56;
-- each KazakhGold GDR of approximately USD 4.00.
Based on the above assumed values, the Exchange Ratio implies a
value for the existing issued share capital of Polyus Gold of
approximately USD13.1 billion.
The Private Exchange Offer will be subject to the terms and
conditions to be set out in the Private Exchange Offer Document and
Forms of Acceptance, which conditions include those set out below,
each of which may be waived (to the extent any such condition is
capable of being waived) by KazakhGold at any time, in whole or in
part, in its sole discretion:
1. valid acceptances having been received by the Expiration Time
of the Private Exchange Offer for 30,500,440 Polyus Securities
representing in aggregate 16% of the existing issued and
outstanding share capital of Polyus Gold;
2. the Principal Shareholders Option Agreement and the Jenington
Option Agreement remaining in full force and effect and the parties
complying with their respective obligations under the Principal
Shareholders Option Agreement and the Jenington Option
Agreement;
3. the Resolutions to be proposed at the Extraordinary General
Meeting of KazakhGold shareholders having been duly passed at such
meeting;
4. all governmental and regulatory approvals, consents and
waivers necessary to permit KazakhGold and other parties to the
Transactions to consummate the Proposed Combination (or any one or
more of them) having been received in form and substance
satisfactory to KazakhGold and remaining in full force and
effect;
5. in KazakhGold's opinion, no event affecting the business,
operations, properties, condition (financial or otherwise), assets,
liabilities or prospects of KazakhGold or Polyus Gold, or their
respective subsidiaries or affiliates, that would or might
prohibit, prevent, restrict or delay consummation of the Private
Exchange Offer (or any other of the Transactions), shall have
occurred; and
6. in KazakhGold's opinion, no action or proceeding shall have
been instituted or threatened that would impair a contemplated
purpose of the Private Exchange Offer (or the other Transactions),
and no development shall have occurred that would materially or
adversely affect the business, operations, properties, condition
(financial or otherwise), assets, liabilities or prospects of
KazakhGold or Polyus Gold, or their respective subsidiaries or
affiliates, including, without limitation, the commencement of war,
armed hostilities, terrorist action or any other international or
national calamity.
KazakhGold reserves the right in its sole discretion to amend or
extend the Private Exchange Offer or to terminate the Private
Exchange Offer at any time and for any reason, including if any of
the conditions are not satisfied (or, where capable of waiver,
waived), up until completion of settlement under the Private
Exchange Offer.
Additional information on the Private Exchange Offer will be set
out in the Private Exchange Offer Document and the Prospectus, to
be published shortly.
3. The Principal Shareholders Option Agreement
KazakhGold has entered into the Principal Shareholders Option
Agreement with entities beneficially owned by the Principal
Shareholders of Polyus Gold. Under the Principal Shareholders
Option Agreement, the Principal Shareholders have granted
KazakhGold the option to acquire their entire holdings of Polyus
Securities, representing, in aggregate 73.2% of the issued and
outstanding share capital of Polyus Gold, using the same exchange
ratio as is used in the Private Exchange Offer. The options under
the Principal Shareholders Option Agreement are exercisable during
the period commencing on 14 July 2011 and ending on the date
falling 30 days thereafter or such later date as may be determined
pursuant to the Principal Shareholders Option Agreement in the
event that the Private Exchange Offer is extended. The Principal
Shareholders Option Agreement is subject to conditions as to
receipt and validity of governmental and regulatory approvals, the
passing of the resolutions at the Extraordinary General Meeting of
KazakhGold and receipt of acceptances in the Private Exchange
Offer, as well as compliance by Nafta and Onexim with their
respective obligations relating to the transfer of their Polyus
Gold Securities under such agreement.
4. Jenington Option Agreement
KazakhGold has entered into the Jenington Option Agreement under
which Jenington has granted KazakhGold the option to acquire
Jenington's entire existing holding of 10,776,161 Polyus Shares,
representing, in aggregate, approximately 5.65% of the existing
issued ordinary share capital of Polyus Gold, in exchange for
KazakhGold Shares, using the same exchange ratio applicable to
Polyus Shares as is used in the Private Exchange Offer. The option
may be exercised and exchange completed at any time prior to or
after the Expiration Time of the Private Exchange Offer. The
Jenington Option Agreement is subject to conditions as to receipt
and validity of governmental and regulatory approvals, the passing
of the resolutions at the Extraordinary General of KazakhGold and
receipt of acceptances in the Private Exchange Offer.
Appendix III
Information on KazakhGold and Polyus Gold
1. KazakhGold Group:
The KazakhGold Group is one of the leading gold mining companies
in Kazakhstan based upon its gold resources.
The KazakhGold Group's business dates back to 1929, when gold
ore was discovered at the Aksu deposit in Northern Kazakhstan.
Exploration began at the KazakhGold Group's Bestobe and Zholymbet
deposits in 1932. The KazakhGold Group's principal mining
operations are in Kazakhstan, comprising:
-- the Aksu mine (including the Aksu and adjacent Quartzite
Hills deposits);
-- the Bestobe mine;
-- the Zholymbet mine; and
-- the Akzhal mine
In addition, the KazakhGold Group has development properties in
Northern, Eastern and Central Kazakhstan, as well as in Romania and
exploration projects at Yuzhny Karaultube and Kyzylsor.
On 9 July 2009, Jenington made the Partial Offer to shareholders
of KazakhGold. The Partial Offer was declared wholly unconditional
on 14 August 2009, following which Jenington became the KazakhGold
Group's controlling shareholder.
As part of the Partial Offer, Jenington also agreed to
underwrite the Placing.
In April 2010, a pilot gold production programme began at the
Akzhal deposit. The deposit is located in the Zharminsky district
of Eastern Kazakhstan and contains 61.7 thousand tonnes of ore
reserves category B+C1+C2 with the gold grade of 7.9 g/t. At the
Akzhal deposit the KazakhGold Group launched a 0.3 mtpa pilot heap
leaching facility which produces gold-bearing sorbent further
processed at an in-house plant in Ust-Kamenogorsk (maximum
processing capacity up to 5 tonnes or 160 k oz of dore gold per
annum) to produce dore gold.
On 19 May 2010, the KazakhGold Group announced a development
programme for upgrading its facilities with the goal of achieving
an annual production level of 500 thousand troy ounces of gold by
2016.
In 2010, the KazakhGold Group produced 110.5 thousand ounces of
gold and sold 103.3 thousand ounces of gold at an average achieved
sale price of USD 1,107.8 per contained ounce. In 2010, the
KazakhGold Group had revenue of USD 115.7 million and loss before
income tax of USD 55.9 million. As at 31 December 2010, the
KazakhGold Group's total assets were USD 241.7 million.
Further information on KazakhGold will be set out in the
Prospectus to be published shortly or are available on the
KazakhGold website: http://www.kazakhgold.com/.
2. Polyus Gold:
The Polyus Gold Group is an international gold mining company,
the largest gold producer in Russia, according to the Russian Union
of Gold Miners, and one of the world's leading gold producers based
on mineral resources and production volumes. The Polyus Gold Group
develops and mines hardrock gold and alluvial gold deposits, with
operations in the Krasnoyarsk, Irkutsk, Magadan and Republic of
Sakha (Yakutia) regions of Russia, and, since August 2009, has held
gold mining assets in Kazakhstan as a result of its acquisition of
a controlling stake in KazakhGold. In 2010, the Polyus Gold Group
produced 1.276 million troy ounces of gold, excluding 110 thousand
ounces of gold produced by KazakhGold's operations in 2010), or
approximately 20% of total Russian gold production (1.231 million
troy ounces in 2009, excluding 30 thousand ounces of gold produced
by KazakhGold's operations during August to December 2009,
representing 19% of Russian gold production).
Polyus Gold estimates the mine life of the Polyus Gold Group's
mineral reserves base to amount to approximately 64 years of
hardrock gold and approximately 9 years of alluvial gold. The
Polyus Gold Group's proved and probable reserves, estimated in
accordance with JORC Code classifications, were 78.2 million troy
ounces as at 1 January 2011.
For the year ended 31 December 2010, the Polyus Gold Group had
total gold sales of USD 1,711 million, total sales of USD 1,749
million and profit before income tax of USD 481 million, and, as at
31 December 2010, total assets of USD 4,004 million and equity of
USD 3,241 million.
The Polyus Gold Group's major gold deposits are:
-- in the Krasnoyarsk region - the Olimpiada deposit, which is
one of the largest gold deposits in Russia, the Blagodatnoye,
Titimukhta, and Kvartsevaya Gora deposits, and the Razdolinskaya,
Zyryanovskaya, Kuzeevskaya, and Panimba fields;
-- in the Irkutsk region - the Zapadnoye, Verninskoye, Pervenets
and Chertovo Koryto deposits, and the Artemievskoye, Medvezhy and
Mukodek goldfields, as well as 113 alluvial deposits;
-- in the Magadan region - the Natalka deposit and the Degdekan,
Vostochnaya, Omchak and Chai-Yurinskaya fields;
-- in the Republic of Sakha (Yakutia) - the Kuranakh ore body
and the Piniginskoye and Nezhdaninskoye deposits; and
-- following the completion of the Partial Offer on 14 August
2009, the Polyus Gold Group acquired Aksu, Bestobe and Zholymbet
deposits in the Akmola region of the Republic of Kazakhstan, as
well as a number of exploration and development properties in
Kazakhstan, Romania and Kyrgyzstan.
Further information on Polyus Gold will be set out in the
Prospectus to be published shortly or are available on the Polyus
Gold website: http://www.polyusgold.com/eng/.
DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise. The plural includes the
singular and vice versa unless the context requires otherwise.
"ADRs" American depositary receipt (s)
"ADSs" the American depositary shares of
Polyus Gold, with two ADSs representing
one Polyus Share
"Clearstream" Clearstream Banking, Societe Anonyme
"Closing Price" the middle market quotation as derived
from the Daily Official List of the
London Stock Exchange
"Combined Group" the combined group resulting from
the Proposed Combination
"Company" KazakhGold Group Limited (expected
to be renamed "Polyus Gold International
Limited" on completion of the Proposed
Combination)
"Computershare" Closed Joint-Stock Company "Computershare
Registrar", a company incorporated
and registered in the Russian Federation
"Depositary" The Bank of New York Mellon, in its
capacity as company depositary
"DTC" The Depository Trust Company
"Eligible Polyus ADS Polyus ADS Holders that are incorporated
Holders" and registered, if applicable, and
located outside of the Russian Federation
and other jurisdictions in which the
making and accepting the Private Exchange
Offer is not permitted by applicable
legislation, and legal entities
incorporated, registered or located in
the Russian Federation, that are
"qualified investors" under the Russian
Securities Market Law
"Eligible Polyus Securityholders" Eligible Polyus Shareholders and
Eligible Polyus ADS Holders
"Eligible Polyus Shareholders" Polyus Shareholders that are incorporated
and registered, if applicable, and/or
located outside the Russian Federation
and other jurisdictions in which the
making and accepting the Private Exchange
Offer is not permitted by applicable
legislation, and certain individuals and
legal entities incorporated, registered
or located in the Russian Federation to
whom the Private Exchange Offer Document
will be addressed by KazakhGold, provided
that they are "qualified investors" under
the Russian Securities Market Law
"Euroclear" Euroclear Bank N.V./S.A., as operator
of the Euroclear system
"Exchange Ratio" for each Polyus Share: 17.14 KazakhGold
GDRs
for each Polyus ADS*: 8.57 KazakhGold
GDRs
*Every two Polyus ADSs represent
one Polyus Share.
"Expiration Time" 5.00 p.m., New York City time, or
10.00 p.m., London time, on 18 July
2011, or 01.00 a.m., Moscow time,
on 19 July 2011, the deadline for
acceptances of the Private Exchange
Offer
"Extraordinary General the extraordinary general meeting
Meeting" of KazakhGold shareholders to be
held at 10.00 a.m. on 14 July 2011
"Financial Services the Financial Services Authority
Authority" or "FSA" of the UK in its capacity as the
competent authority for the purposes
of Part VI of FSMA and in the exercise
of its functions in respect of admission
to the Official List otherwise than
in accordance with Part VI of FSMA
"FSMA" the Financial Services and Markets
Act 2000
"GDRs" the global depositary receipts of
KazakhGold, each representing one
Share, including the KazakhGold Level
I GDRs and the KazakhGold Regulation
S GDRs
"HSBC" HSBC Bank plc
"Jenington Option Agreement" the conditional option agreement
between Jenington and KazakhGold
pursuant to which KazakhGold has
the option to acquire Jenington's
entire holding of 10,776,161 Polyus
Shares, representing, in aggregate,
approximately 5.65% of the existing
issued ordinary share capital of
Polyus Gold, in exchange for KazakhGold
Shares, using the same exchange ratio
as is used in the Private Exchange
Offer
"KazakhGold GDRs" KazakhGold Level I GDRs and KazakhGold
Regulation S GDRs
"KazakhGold Group" KazakhGold and its subsidiaries
"KazakhGold Level I Level I global depositary shares
GDRs" of KazakhGold
"KazakhGold Regulation global depositary receipts of KazakhGold
S GDRs" issued under KazakhGold's GDR programme
for the issuance of GDRs outside
the United States
"KazakhGold Securities" KazakhGold GDRs and/or KazakhGold
Shares, as the case may be
"KazakhGold Shares" ordinary shares of KazakhGold, each
with a nominal value of GBP0.0001
"London Stock Exchange" London Stock Exchange plc
"MICEX" the Moscow Interbank Currency Exchange
"Nafta" a privately-owned group of portfolio
investment companies under the beneficial
ownership of Mr. Suleiman Kerimov,
including Nafta Moskva (Cyprus) Limited
and Wandle Holdings Limited
"Official List" the Official List of the UKLA
"Onexim" a privately-owned group of companies
under the beneficial ownership of
Mr. Mikhail Prokhorov, including
Onexim Holdings Limited, which is
the shareholder and beneficial owner
of Coverico Holdings Co. Limited
and Bristaco Holdings Co. Limited
"Options" each of (i) the options granted by
entities under the respective beneficial
ownership of Nafta and Onexim of Polyus
Gold to KazakhGold to purchase the Polyus
Securities under the Principal
Shareholders Option Agreement and (ii)
the option granted by Jenington to
KazakhGold under the Jenington Option
Agreement
"Polyus ADS Holders" holders of Polyus ADSs
"Polyus ADSs" Level I American depositary shares
of Polyus Gold, with two Polyus ADSs
representing one Polyus Share
"Polyus Gold" OJSC Polyus Gold
"Polyus Securities" the Polyus Shares and/or Polyus ADSs,
as the case may be
"Polyus Securityholders" the holders of Polyus Shares or Polyus
ADSs, or both
"Polyus Shareholders" the holders of Polyus Shares
"Polyus Shares" the common shares of Polyus Gold,
each with a nominal value of RUB
1.00
"Premium Listing" a listing of equity shares on the
premium segment of the UKLA's Official
List
"Principal Shareholders" Nafta and Onexim
"Principal Shareholders the conditional option agreement between
Option Agreement" KazakhGold and entities beneficially
owned by each of the Principal
Shareholders of Polyus Gold, under which
KazakhGold has the options to acquire
Polyus Securities representing in
aggregate 73.2% of the existing issued
ordinary share capital of Polyus Gold
using the same exchange ratio as is used
in the Private Exchange Offer
"Private Exchange Offer" the conditional private exchange
offer by KazakhGold to acquire 16%
of the issued Polyus Securities from
Eligible Polyus Securityholders
"Private Exchange Offer the document to be issued by KazakhGold
Document" setting out the terms and conditions
of the Private Exchange Offer together
with the related forms of acceptance
"Prospectus" the prospectus, to be issued by
KazakhGold in connection with the Private
Exchange Offer and admission of Level I
KazakhGold GDRs and additional Regulation
S/Rule 144A KazakhGold GDRs to the
Official List
"Register" the register of Polyus Shareholders
held by Computershare
"RIS" Regulatory Information Service, one
of the regulatory information services
authorised by the UKLA to receive,
process and disseminate regulatory
information in respect of companies
listed on the London Stock Exchange
"RTS" the Russian Trading System Stock
Exchange
"RUB" the lawful currency of the Russian
Federation
"Russian Securities the Russian Federal Law No. 39-FZ
Market Law" dated 22 April 1996 "On the Securities
Market", as amended
"Senior Notes" KazakhGold's USD 200 million 9.375%
Senior Notes due November 2013
"Shareholders" holders of Shares
"Shares" ordinary shares of KazakhGold, each
with a nominal value of GBP0.0001
"Standard Listing" a listing of securities on the standard
segment of the UKLA's Official List
"Transactions" the series of conditional transactions
through which KazakhGold intends
to acquire all or substantially all
of the entire issued share capital
of Polyus Gold including the Private
Exchange Offer, and the exercise
of the Options under the Principal
Shareholders Option Agreement and
the Jenington Option Agreement
"UKLA" or "UK Listing the United Kingdom Listing Authority,
Authority" a division of the FSA, in its capacity
as the competent authority under
Part VI of FSMA
"United Kingdom" or the United Kingdom of Great Britain
"UK" and Northern Ireland
"United States" or "U.S." the United States of America, its
territories and possessions, any
state of the United States, the District
of Columbia, and all other areas
subject to its jurisdiction
"USD" or "United States the lawful currency of the United
dollars" States
This information is provided by RNS
The company news service from the London Stock Exchange
END
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