TIDMEVR
RNS Number : 9129V
Evraz Plc
19 April 2021
THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION TO ANY PERSON LOCATED
OR RESIDENT IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE
SUCH ANNOUNCEMENT.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
EVRAZ announces consent solicitation
19 April 2021
EVRAZ plc (the "Issuer" or "EVRAZ") announces a consent
solicitation in relation to its outstanding notes detailed in the
table below (each of the three series of notes referred to below, a
"Series", and all outstanding notes of all Series collectively, the
"Notes").
Regulation S Rule 144A Global
Global Certificate ISIN
Description of Certificate ISIN / Common Code / Amount Early Consent
Notes / Common Code CUSIP Amount Issued Outstanding Fees
U.S.$500,000,000 XS1405775377 / - U.S.$500,000,000 U.S.$ 500,000,000 U.S.$ 2.50 per
6.75% notes due 140577537 U.S.$1,000 in
2022 (the "2022 principal amount
Notes") of Qualifying
Notes
U.S.$750,000,000 XS1533915721 / US30050AAG85 / U.S.$750,000,000 U.S.$ 750,000,000 U.S.$ 4.50 per
5.375% notes due 153391572 111731110 / U.S.$1,000 in
2023 (the "2023 30050A AG8 principal amount
Notes") of Qualifying
Notes
U.S.$700,000,000 XS1843443273 / US30052KAA79 / U.S.$700,000,000 U.S.$ 700,000,000 U.S.$ 6.50 per
5.250% notes due 184344327 111730776 / U.S.$1,000 in
2024 (the "2024 30052KAA7 principal amount
Notes") of Qualifying
Notes
Overview
The Issuer has today provided notices of meetings (the "Notices
of Meetings") to solicit proxies (the "Solicitation") from the
beneficial holders of the outstanding Notes (the "Noteholders") to
consider and, if thought fit, pass Extraordinary Resolutions (the
"Extraordinary Resolutions") at meetings of the Noteholders (the
"Meetings") in relation to certain consents and amendments (the
"Consents and Amendments") being sought to (i) the terms and
conditions of the 2022 Notes as set out in Schedule 2 to the 2022
Trust Deed, (ii) the terms and conditions of the 2023 Notes as set
out in Schedule 2 to the 2023 Trust Deed and (iii) the terms and
conditions of the 2024 Notes as set out in Schedule 2 to the 2024
Trust Deed, all as more fully described in the consent solicitation
memorandum (the "Memorandum") dated 19 April 2021 (the
"Proposal").
Subject to the terms of the Proposal, Noteholders who validly
vote in favour of the Proposal in accordance with the Solicitation
will be entitled to receive the applicable Early Consent Fee on the
Settlement Date (see "Early Consent Fee" below). Noteholders are
advised to refer to the Memorandum for meanings of capitalised
terms used in this announcement, the full terms of the Solicitation
and the procedures related thereto.
The Notices of Meetings convening the Meetings via
teleconference , at which the Extraordinary Resolutions to approve
the Proposal and its implementation will be considered and, if
thought fit, passed, have been published in accordance with the
Conditions.
The initial Meeting (in respect of the 2022 Notes) will commence
at 12:00 p.m. (London time) on 12 May 2021, with subsequent
Meetings in respect of each other Series being held at 10 minute
intervals thereafter or after the completion of the preceding
Meeting (whichever is later).
Background to and Rationale for the Proposal
Background
On 26 January 2021, EVRAZ announced that the Board of EVRAZ had
given approval for EVRAZ to consider the strategic merits of and
possible structures for a potential demerger of EVRAZ's coal
business, currently consolidated under PAO Raspadskaya
("Raspadskaya" and the potential transaction, the "Potential
Demerger").
Whilst the Board of EVRAZ continues to evaluate various
strategic options and there can be no assurance that the Potential
Demerger will be undertaken, on 15 April 2021, EVRAZ announced (the
"Announcement") that the Board of EVRAZ had given its approval for
the Issuer to move forward in its preparations for the Potential
Demerger and that its current intention, were the Potential
Demerger to be effected, would be for the Potential Demerger to be
structured as described below. These actions, if effected, would be
subject to receipt of applicable Board, shareholders', regulatory
and court approvals and confirmations (the "Demerger
Conditions").
It is expected that the Potential Demerger, if implemented will
benefit EVRAZ's stakeholders in the following areas:
-- Differentiated value proposition: Shape a clear profile for
EVRAZ as a global leading steel producer with a focus on high
value-add infrastructure steel products, geographically diversified
asset and sales base;
-- Increased earnings stability for EVRAZ: Historically the
EBITDA margin of the Coal segment has been more volatile than that
of the Steel segment;
-- Increased transparency over sustainability performance and
goals: Allow EVRAZ to concentrate on its ESG priorities, enhancing
accountability of ESG achievements and comparability of results
against peers; and
-- Optionality for investors: Flexibility to customise the
exposure to respective sectors, earnings volatility profiles and
ESG performance in accordance with investors' risk and return
appetite.
Description of the Potential Demerger
Dividend Demerger
It is currently intended that the Potential Demerger, if
undertaken, will be effected by EVRAZ declaring and distributing a
dividend in specie of all of the shares which EVRAZ holds in
Raspadskaya to all shareholders of EVRAZ, pro rata to their
existing shareholdings in EVRAZ (the "Dividend Demerger"). As at
the date hereof, EVRAZ holds 90.9 [1] % of the total shares of
Raspadskaya.
Transactions between Raspadskaya and EVRAZ
(i) Certain financing arrangements
Certain financing arrangements are intended to be put in place
and/or completed prior to the Potential Demerger being effected in
order to rebalance the capital structure of EVRAZ and
Raspadskaya.
On 18 December 2020, the shareholders of Raspadskaya approved
the acquisition of 100% of the equity capital of AO UCC
Yuzhkuzbassugol ("YUKU") from EVRAZ NTMK, a wholly owned subsidiary
of the Issuer, for RUB 67,741 million (U.S.$917 million as at 31
December 2020) payable in cash (the "YUKU Consideration"). The
transfer of all shares in YUKU to Raspadskaya was completed on 30
December 2020 and the payment of the YUKU Consideration is expected
to be made by Raspadskaya by 30 June 2021. To fund the payment of
the YUKU Consideration and other expenses related to the Potential
Demerger, it is expected that Raspadskaya will raise new debt
financings from a variety of sources, including the Russian debt
capital markets and bilateral bank facilities (the "Raspadskaya
Financings").
(ii) Raspadskaya Dividends
On 30 March 2021, Raspadskaya announced annual dividends in the
amount of RUB3.8 billion (equivalent of approximately U.S.$50
million as of 30 March 2021) to Raspadskaya's shareholders.
Following completion of a share buyback by Raspadskaya in February
2021, EVRAZ owns 90.9% of the total shares in Raspadskaya and as
such would receive the Rouble equivalent of approximately U.S.$42
million (the "Dividend") net of applicable withholding tax.
(iii) Arrangements between EVRAZ and Raspadskaya following the Potential Demerger
The Potential Demerger if undertaken, will necessitate that
EVRAZ and Raspadskaya enter into various contractual agreements in
order to effect the Potential Demerger and govern the relationship
between them thereafter.
EVRAZ and Raspadskaya intend to enter into a demerger agreement
to give effect to the separation of the steel and coal businesses
and a strategic cooperation deed pursuant to which EVRAZ would
provide certain services to Raspadskaya going forward. Contractual
arrangements pursuant to which EVRAZ purchases coking coal from
Raspadskaya would need to be extended. All future arrangements,
including for such services provision and for the purchase of
coking coal from Raspadskaya would be on arm's length terms.
Relative Contribution of Raspadskaya
The audited consolidated financial statements of EVRAZ as of and
for the year ended 31 December 2020 (the "2020 Financial
Statements") as set out on pages 158 to 249 of EVRAZ's annual
report for that year (the "2020 Annual Report") which may be found
at:
https://www.evraz.com/en/investors/reports-and-results/annual-reports/
are hereby incorporated by reference herein. The relative
contribution of Raspadskaya as of and for the year ended 31
December 2020 is presented in the Coal segment.
Certain Unaudited Pro-Forma Financial Information and Debt
Management Priorities
The table below sets forth unaudited and unreviewed pro forma
financial information of EVRAZ (excluding Raspadskaya and its
subsidiaries) to illustrate the effect of the Potential Demerger
and the relevant transactions between EVRAZ and Raspadskaya
described above.
The unaudited and unreviewed pro forma financial information
below assumes that:
(i) with respect to the calculation of EBITDA, that the
Potential Demerger had occurred on 1 January 2020; and
(ii) with respect to the calculation of Cash and Cash
Equivalents and Net Debt, that the Potential Demerger was completed
on 31 December 2020 and the YUKU Consideration and the Dividend
were received by EVRAZ on 31 December 2020.
As at and for the year ended 31 December
2020
in millions of U.S. dollars
EVRAZ Pro Forma post EVRAZ
Potential Demerger
Cash and Cash Equivalents U.S.$2,008 [2] U.S.$1,627 [3]
EBITDA [4] U.S.$1,830 [5] U.S.$2,212 [6]
Net Debt [7] U.S.$2,975 [8] U.S.$3,356 [9]
If the Potential Demerger is implemented, EVRAZ intends to
remain committed to its existing financial policies, in particular
to continue to target Net Debt/EBITDA below 2.0x through the
cycle.
It is expected that additional Cash and Cash Equivalents that
are received by EVRAZ as a result of the YUKU Consideration and the
Dividend will be applied to selectively repay Total Debt [10] of
EVRAZ that was outstanding as at 31 December 2020. As at 31
December 2020 Raspadskaya did not have any outstanding external
Total Debt.
Rating Agencies
EVRAZ does not expect any negative rating action as a result of
the announcement of the Consent Solicitation.
Summary of the Proposal
Set out below is a summary of the key changes that are the
subject of the Proposal. It is not intended to be a full
description of all the changes and Noteholders are referred to, and
should carefully review, the Proposal in full, as set out under
"Terms of the Solicitation - General".
The holders of each Series of Notes are being requested to
provide their consent to, and approve, the following, with the
Consents and Amendments (if approved) to take effect on the
Effective Date:
-- Condition 4.3 (Transactions with Affiliates) shall be amended
by the insertion of the following at the end of the proviso:
"(x) transactions made in order to effect the Permitted
Demerger."
-- Condition 4.5 (Mergers and Similar Transactions) shall be
amended by the insertion of the following at the end of Condition
4.5(c):
"or (iii) the Permitted Demerger."
-- Condition 19 (Definitions)
o The definition of Aggregate Subsidiary Indebtedness shall be
amended by the insertion of the following at the end of the
definition:
"and (f) Indebtedness of a Subsidiary of the Issuer with a final
maturity later than the Repayment Date."
o The definition of Asset Sale shall be amended by the insertion
of the following at the end of the definition:
"or the Permitted Demerger"
o The following new defined terms shall be inserted:
-- ""Demerger" means the delivery, by the Issuer, to all
shareholders of the Issuer as a class, pro rata to their existing
shareholding's in the Issuer, of all of the Issuer's interests in
the Capital Stock of Raspadskaya, whether directly or indirectly,
and whether by way of a dividend in specie or other
arrangement.
-- "Issuer's Coal Business" means PAO Raspadskaya
("Raspadskaya") and its Subsidiaries as at 31 December 2020.
-- "Permitted Demerger" means the demerger of the Issuer's Coal
Business by means of a Demerger and any other transactions as may
be necessary to give effect thereto."
Record Date
In respect of DTC Notes, 5:00 p.m. (EST) / 10:00 p.m. (London
time) on 30 April 2021 has been set as the Record Date (see
"Expected Timetable" below) in respect of the Proposal. The Record
Date is used to determine which DTC Participants will be allowed to
vote on the Proposal, and only those Direct Participants in DTC
appearing on the omnibus proxy issued by DTC on the Record Date
will be entitled to submit Forms of Sub-Proxy.
Early Consent Fee
In consideration, Qualifying Noteholders who validly submit an
Electronic Voting Instruction or who validly submit a Form of
Sub-Proxy, as applicable, in favour of the relevant Extraordinary
Resolution (and who have not validly revoked their Electronic
Voting Instruction or Form of Sub-Proxy, as applicable) that is
received by the Tabulation Agent on or prior to the Early Consent
Expiration Time will be entitled to receive the applicable Early
Consent Fee.
The following sets out the applicable Early Consent Fee payable
to a Noteholder on the Settlement Date (subject to the terms of the
Memorandum) in respect of each Series of Notes (in each case per
U.S.$1,000 in principal amount of Qualifying Notes held by such
Noteholder):
Series of Notes Early Consent Fee
2022 Notes U.S.$2.50
2023 Notes U.S.$4.50
2024 Notes U.S.$6.50
Revocation of instructions
Noteholders who have submitted Electronic Voting Instructions or
Forms of Sub-Proxy, as applicable, have a right to revoke such
instruction in the following circumstances only: (i) if required by
law or permitted by the relevant Trust Deed (as applicable); or
(ii) if the Issuer considers that any modification or amendment
(excluding any material modification or amendment to the relevant
Extraordinary Resolution which may not be made during the relevant
Meeting notice period) is materially prejudicial to Noteholders
compared with the initial terms of the Proposal and Solicitation.
In the case of (ii) above, the Issuer will give notice to
Noteholders via a public announcement and specify a time period of
not less than three London Business Days from the date of such
announcement during which Noteholders will have the right to revoke
their Electronic Voting Instructions or their Forms of Sub-Proxy,
as applicable.
Expected Timetable (assuming the Meeting is not adjourned)
Event Date and Time
------------------------------------------------- ---------------------------
Launch Date/Announcement of the Solicitation 19 April 2021
Announcement of the Solicitation and each
Notice of Meeting given to Noteholders
of each Series through the Clearing Systems.
Memorandum made available to Noteholders
via the Tabulation Agent (free of charge).
Record Date 5:00 p.m. (EST)
Record Date in respect of DTC Notes. Only / 10:00 p.m. (London
Direct Participants in DTC at this time time) on 30 April
and date will be entitled to submit a 2021
Form of Sub-Proxy.
Early Consent Expiration Time and Early 5:00 p.m. (EST)
Consent Date / 10:00 p.m. (London
Deadline for Noteholders to deliver or time) on 30 April
procure delivery of Electronic Voting 2021
Instructions or Forms of Sub-Proxy in
favour of the relevant Extraordinary Resolution
to the Tabulation Agent to be eligible
to receive the applicable Early Consent
Fee.
Final Consent Expiration Time and Final 12:00 noon (EST)
Consent Date / 5:00 p.m. (London
Deadline for Noteholders to deliver or time) on 7 May 2021
procure delivery of Electronic Voting
Instructions or Forms of Sub-Proxy in
favour of the relevant Extraordinary Resolution
to the Tabulation Agent to be eligible
to vote but not to receive the applicable
Early Consent Fee.
Latest time for Noteholders to appoint
the Tabulation Agent (or its nominee)
as proxy to attend the relevant Meeting
and vote in respect of the applicable
Extraordinary Resolution or to appoint
another proxy to attend and vote at the
relevant Meeting in accordance with the
provisions of the relevant Trust Deed
and the relevant Notice of Meeting.
Date of the Meetings 12 May 2021
Announcement of results 12 May 2021, or
The announcement via the Clearing Systems as soon as reasonably
of the results or notice of adjournment practicable after
of the Meetings, as the case may be. the Meetings
Effective Date Not later than 2
If any Extraordinary Resolutions are passed, days after the relevant
without requiring any adjourned meetings, Extraordinary Resolutions
the date on which the relevant Proposed have been passed
Supplemental Trust Deeds shall be executed
and delivered and become effective.
Settlement Date On or about 14 May
2021
Settlement in respect of the applicable
Early Consent Fees.
The Issuer will make (or cause to be made) announcements in
connection with the Solicitation in accordance with applicable law
(i) by delivery of notices to the Clearing Systems for
communication to Direct Participants, (ii) through RNS and (iii)
through RIS. Copies of all announcements, notices and press
releases may also be obtained from the Tabulation Agent at its
address and telephone number as set forth on the back cover of this
Memorandum. Noteholders are urged to contact the Solicitation Agent
or the Tabulation Agent for the relevant announcements during the
course of the Solicitation, the contact details for which are on
the last page of this Memorandum.
Solicitation Agent
Any questions from any person regarding the terms of the
Proposal or the Solicitation may be directed to the Solicitation
Agent at the addresses and telephone number specified below:
SOLICITATION AGENT
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London E14 5JP
United Kingdom
Attention: Liability Management
Telephone: +44 (0) 207 134 2468
Email: em_europe_lm@jpmorgan.com
Tabulation Agent
Noteholders may obtain copies of the Memorandum, the Notices of
Meetings and any announcements in connection with the Solicitation
from the Tabulation Agent:
TABULATION AGENT
Lucid Issuers Services Limited
Tankerton Works
12 Argyle Walk
London WC1H 8HA
United Kingdom
Attention: Arlind Bytyqi / Jacek Kusion
By telephone: +44 207 704 0880
By email: evraz@lucid-is.com
Neither the Solicitation Agent, the Tabulation Agent, BNY Mellon
Corporate Trustee Services Limited (the "Trustee") nor the Issuer
takes any responsibility for the contents of this announcement and
none of the Issuer, the Solicitation Agent, the Tabulation Agent,
the Trustee or any of their respective directors, employees or
affiliates makes any representation or recommendation whatsoever
regarding the Solicitation, or any recommendation as to whether
Noteholders should provide their consent in the Solicitation. This
announcement must be read in conjunction with the Memorandum. This
announcement and the Memorandum contain important information which
should be read carefully before any decision is made with respect
to the Solicitation. If any Noteholder is in any doubt as to the
action it should take, it is recommended to seek its own advice,
including as to any tax consequences, from its stockbroker, bank
manager, solicitor, accountant or other independent adviser.
Within the United Kingdom, this announcement is directed only at
persons having professional experience in matters relating to
investments who fall within the definition of "investment
professionals" in Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 ("relevant
persons"). The investment or investment activity to which this
announcement relates is only available to and will only be engaged
in with relevant persons and persons who receive this announcement
who are not relevant persons should not rely or act upon it.
This announcement is not a solicitation of consent with respect
to any Notes and does not constitute an invitation to participate
in the Solicitation in or from any jurisdiction in or from which,
or to or from any person to or from whom, it is unlawful to make
such invitation under applicable securities laws. The Solicitation
is being made solely pursuant to the Memorandum, which sets forth a
detailed statement of the terms of the Solicitation.
The distribution of this announcement in certain jurisdictions
may be restricted by law. Persons into whose possession this
announcement comes are required to inform themselves about, and to
observe, any such restrictions.
[1] The total number of shares used to calculate this percentage includes treasury shares.
[2] Cash and cash equivalents as appearing in the 2020 Financial
Statements, as adjusted by (x) the elimination of Cash and cash
equivalents held by the Coal Segment as set out in the 2020
Financial Statements; and (y) the addition of (1) the YUKU
Consideration and (2) the Dividend.
[3] Cash and cash equivalents as appearing in the 2020 Financial Statements.
[4] EBITDA is determined as a segment's profit/(loss) from
operations adjusted for social and social infrastructure
maintenance expenses, impairment of assets, profit/(loss) on
disposal of property, plant and equipment and intangible assets,
foreign exchange gains/(losses) and depreciation, depletion and
amortisation expense. See Note 3 of the 2020 Financial Statements
for additional information and reconciliation with IFRS financial
statements. The current calculation is different from that used for
covenant compliance calculations.
[5] EBITDA as appearing in the 2020 Annual Report as adjusted to
reflect revenues, expenses and income taxes relating only to the
Steel segment. Revenues generated from or expenses incurred in
respect of Raspadskaya and its subsidiaries were treated as
transactions with third parties.
[6] EBITDA as appearing in the 2020 Annual Report.
[7] Net Debt represents total debt less cash and liquid
short-term financial assets, including those related to disposals
classified as held for sale. Net debt is not a measure under IFRS
and should not be considered as an alternative to other measures of
financial position. EVRAZ's calculation of net debt may be
different from the calculation used by other companies and
therefore comparability may be limited. The current calculation is
different from that used for covenant compliance calculations.
[8] Net Debt as appearing in the 2020 Annual Report, as adjusted
by (x) the addition of (1) the YUKU Consideration and (2) the
Dividend; and (y) the elimination of Cash and Cash equivalents held
by the Coal Segment as set out in the 2020 Financial Statements. As
at 31 December 2020 Raspadskaya did not have any outstanding
external debt.
[9] Net Debt as appearing in the 2020 Annual Report.
[10] Total debt represents the nominal value of loans and
borrowings plus unpaid interest, finance lease liabilities, loans
of assets classified as held for sale and the nominal effect of
cross-currency swaps on principal of Rouble denominated notes.
Total debt is not a measure under, IFRS and should not be
considered as an alternative to other measures of financial
position. EVRAZ's calculation of total debt may be different from
the calculation used by other companies and therefore comparability
may be limited. The current calculation is different from that used
for covenant compliance calculations.
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END
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April 19, 2021 07:16 ET (11:16 GMT)
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