TIDMPOG
RNS Number : 9860A
Petropavlovsk PLC
02 October 2020
2 October 2020
THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION TO ANY PERSON LOCATED
OR RESIDENT IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE
SUCH ANNOUNCEMENT.
Petropavlovsk 2016 Limited (the "Issuer") announces a consent
solicitation in relation to the outstanding notes detailed in the
table below (the "Notes")
Petropavlovsk 2016 Limited
Description ISIN/Common Amount Amount Consent Fee Termination
of Notes Code / CUSIP Issued Outstanding Fee
(Rule 144A
Notes)
U.S. Regulation U.S. U.S. 0.25 per 0.10 per
$500,000,000 S: $500,000,000 $500,000,000 cent. of cent.
8.125 per XS1711554102 the of the
cent. / 171155410 principal principal
Guaranteed Rule 144A: amount of amount of
Notes Due US71675MAA45 the the
2022 / 171181208 Qualifying Qualifying
/ 71675M Notes (as Notes (as
AA4 defined in defined in
the the
Memorandum) Memorandum)
------------------- ------------------- ------------------- ------------------ ------------------
Overview
The Issuer has today provided a notice of meeting (the "Notice
of Meeting") to solicit proxies (the "Solicitation") from the
beneficial holders of the outstanding Notes (the "Noteholders") to
consider and, if thought fit, pass an extraordinary resolution (the
"Extraordinary Resolution") at a meeting of the Noteholders (the
"Meeting") in relation to certain waivers (the "Waivers") being
sought in respect of the terms and conditions of the Notes, all as
more fully described in the Consent Solicitation Memorandum (the
"Memorandum") dated 2 October 2020 (the "Proposal").
Subject to the terms of the Proposal, Noteholders who validly
vote in favour of the Proposal in accordance with the Solicitation
prior to the Early Consent Deadline (see "Expected Timetable"
below) will be entitled to receive the Consent Fee or the
Termination Fee (see "Consent Fee/Termination Fee" below), as the
case may be. Noteholders are advised to refer to the Memorandum for
meanings of capitalised terms used but not defined in this
announcement, the full terms of the Solicitation and the procedures
related thereto.
The Notice of Meeting convening the Meeting to be held via
teleconference details provided therein, on 26 October 2020, and to
consider and, if thought fit, pass the Extraordinary Resolution,
has been published in accordance with the Conditions.
The initial Meeting will commence at 10:00 a.m. (London time) on
26 October 2020.
Background to and Rationale for the Proposal
Capitalised terms used, but not defined in this section or in
the Memorandum, shall have the meanings given to them in the
Conditions or the Trust Deed.
Introduction
The Issuer, on 14 November 2017, issued U.S.$500,000,000 8.125
per cent. Guaranteed Notes due 2022 (the "Notes"), of which
U.S.$500,000,000 are currently outstanding. The Notes were
constituted by a trust deed dated 14 November 2017, between the
Issuer and the Trustee (the "Trust Deed"). Under the terms and
conditions of the Trust Deed and pursuant to Schedule 3 thereto
(the "Conditions"), the Issuer and the Parent are required to make
available on the Parent's website and deliver to the Trustee,
pursuant to Clause 6.4.1(b) of the Trust Deed and Condition
4.9.1(ii), semi-annual reports of the Parent (prepared in
accordance with IFRS (as defined in the Trust Deed)), together with
a review report on the financial statements included therein,
within 90 days after the end of the first six months of each
financial year of the Parent.
Accordingly, the Issuer and the Parent were required to deliver
a semi-annual report of the Parent for the six months ended 30 June
2020 prepared in accordance with IFRS (the "30 June 2020
Semi-Annual Report") and also a review report on the financial
statements included in the 30 June 2020 Semi-Annual Report (the "30
June 2020 Review Report" and, together with the 30 June 2020
Semi-Annual Report, the "30 June 2020 Reports"), in each case by 28
September 2020. The 30 June 2020 Reports have not been made
available as of the date of the Memorandum and, on 29 September
2020 and pursuant to Clause 6.2 of the Trust Deed, the Issuer
notified the Trustee of the occurrence of a Default in respect of
the failure to deliver the 30 June 2020 Reports. It is proposed
hereby that the Noteholders agree to certain waivers in respect of
the requirement to make available and deliver the 30 June 2020
Reports by 28 September 2020, as further described below.
Background to and reasons for the delay of the 30 June 2020
Reports
During 2019, the Parent undertook a formal tender process for
the appointment of a new external auditor for the financial year
ending 31 December 2020. Deloitte LLP ("Deloitte") was the auditor
for the financial year ended December 31, 2019, and had been the
Parent's external auditor since 2009. Deloitte did not resign as
the Parent's external auditor, but did inform the Parent's audit
committee (the "Audit Committee") that it would not participate in
its 2019 tender process. Deloitte informed the Audit Committee that
it chose not to participate in the tender process principally due
to its length of service, certain limitations in the Parent's
internal controls and systems for financial reporting and a need
for further investment in the capacity of the finance functions.
Although Deloitte did not participate in the tender, it nonetheless
completed its audit of the Parent's annual financial statements as
of and for the year ended 31 December 2019 and delivered an
unqualified audit report in connection therewith. The Audit
Committee has performed an independent review and has committed to
certain actions to be taken to strengthen the Group's procedures to
manage risks and oversee the Group's internal control framework
which are in process. Please refer to more detailed information in
the Parent's annual report for the year ended 31 December 2019.
As a result of the Parent's tender process in respect of a new
auditor, PricewaterhouseCoopers LLP ("PwC") was chosen as a
successor. During the annual general meeting of its shareholders
held on 30 June 2020 (the "AGM"), PwC was appointed as the Parent's
statutory external auditor for the financial year ending 31
December 2020. On 28 July 2020, the Parent announced that PwC was
not able to accept its appointment pending the results of a further
general meeting held on 10 August 2020 (the "RGM").
On 24 August 2020, PwC formally confirmed to the Parent that it
did not intend to accept its proposed appointment. PwC cited the
reasons for its resignation as the significant changes to the
Parent's board of directors (the "Board") made at the RGM, namely
the removal of the majority of both independent and executive
directors, and its concerns over the corporate governance
environment and the lack of clarity as to the future direction of
the Group. At the time of its resignation, PwC had not performed
any work for the Parent since its proposed appointment as
auditor.
Following PwC's resignation, the Audit Committee commenced the
process of identifying a new auditor with sufficient experience and
expertise to audit a complex business such as the Group. On 21
September 2020, the Parent announced the appointment of MHA
MacIntyre Hudson ("MHA"), the UK member of Baker Tilly
International, as its external auditor for the financial year
ending 31 December 2020. The Parent announced on the same day that
it expects to publish its 30 June 2020 Semi-Annual Report in the
second half of October 2020. MHA have commenced work immediately in
assisting the Parent in the preparation of the 30 June 2020
Reports. The Proposal (as outlined below) is being made to allow
MHA additional time (if required) to conclude its work on the 30
June 2020 Review Report, but it should be noted that the Parent
still expects to release the 30 June 2020 Semi-Annual Report as
previously disclosed.
The Board has been subject to significant change as a result of
shareholder voting at the Parent's most recent AGM and the RGM,
with director candidates, (including those nominated by the Parent
shareholders) including Pavel Maslovskiy, the former chief
executive officer and co-founder, failing to be appointed as
directors by the Parent's shareholders and/or being removed as
directors. In addition, since his appointment, the Parent's interim
chief executive officer (the "Interim CEO") has encountered a lack
of co-operation from certain employees and ex-employees in certain
of the Group's Russian subsidiaries as he works to implement a
controls framework across the Group. This lack of co-operation
included preventing the Interim CEO from obtaining access to the
Group's offices in Moscow on 26 - 27 August 2020, while he was
attempting to safeguard the Group's assets and information. In
addition, the validity of the authority of the Interim CEO to act
on behalf of the Group has been challenged in local Russian courts
and negative and inaccurate
information has been published on social media platforms in
Russia regarding the Interim CEO, the Board and certain of the
Parent's shareholders. The Board is working to resolve these issues
in the best interests of all stakeholders.
Since its appointment at the RGM, the Board has continued to
address the question of Board composition and it has engaged an
external search consultancy to assist it in making further
appointments of independent non-executive directors. The Board
remains committed to ensuring it has the necessary strength and
breadth, with a transparent governance structure that will command
the trust and support of all stakeholders.
The Proposal
As a result of the events described above, the Issuer is
proposing hereby that the Noteholders agree to:
(i) waive (x) the failure by the Issuer or the Parent to comply
with and (y) any Default or Event of Default (each as defined in
the Trust Deed) that has arisen or may arise as a result of a
failure by the Issuer or the Parent to comply with, the requirement
to deliver the 30 June 2020 Semi-Annual Report pursuant to Clause
6.4.1(b) of the Trust Deed and Condition 4.9.1(ii), provided that
if the Parent does not publish the 30 June Semi-Annual Report on
the Parent's website or deliver such report to the Trustee, in each
case on or prior to 15 December 2020, then such waiver shall cease
to apply; and
(ii) waive (x) the failure by the Issuer or the Parent to comply
with and (y) any Default or Event of Default that has arisen or may
arise as a result of a failure by the Issuer or the Parent to
comply with, the requirement to deliver the 30 June 2020 Review
Report pursuant to Clause 6.4.1(b) of the Trust Deed and Condition
4.9.1(ii), provided that if the Parent does not publish the 30 June
2020 Review Report on the Parent's website or deliver such report
to the Trustee, in each case on or prior to 15 December 2020, then
such waiver shall cease to apply ((i) and (ii) together, the
"Waivers").
The Proposal, if implemented, would allow MHA the necessary time
to conduct and prepare the 30 June 2020 Review Report. At this
stage it is not clear whether the Issuer or the Parent will be in a
position to make available on the Parent's website and deliver to
the Trustee the 30 June 2020 Reports prior to the Meeting. If the
Issuer or the Parent makes available on the Parent's website and
delivers to the Trustee the 30 June 2020 Reports prior to the
Meeting, the Issuer or the Parent may terminate the Solicitation.
If a Termination Event occurs, the Issuer will not be obliged to
pay or procure the payment of the Consent Fee, but the Noteholders
will (subject to the terms of the Proposal) be eligible to receive
the Termination Fee.
The failure by the Issuer or the Parent to make available on its
website and to deliver to the Trustee the 30 June 2020 Reports by
28 September 2020 has not resulted in an Event of Default (as
defined under the Trust Deed) nor an event of default under the
other financing arrangements of the Group. If the Extraordinary
Resolution is not passed at the Meeting and the Waivers
contemplated thereby do not become effective, then an Event of
Default may occur in respect of the Notes if the Issuer or the
Parent is still not able to not make available on the Parent's
website and deliver to the Trustee the 30 June 2020 Reports.
Consent Fee/Termination Fee
The Consent Fee or the Termination Fee, if applicable, will be
paid to each Noteholder from whom valid Electronic Voting
Instructions or Forms of Proxy (as applicable) in favour of the
Proposal are received by the Tabulation Agent (and not revoked), as
more fully described in the Memorandum. Noteholders will be
eligible to receive either the Consent Fee or the Termination Fee,
subject to the terms of the Proposal, but not both.
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 Trust Deed (as applicable); or (ii) if the
Issuer considers that any modification or amendment (excluding any
material modification or amendment to the Extraordinary Resolution
which may not be made during the 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 2 October 2020
Announcement of the Solicitation and Notice
of Meeting given to Noteholders 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 13 October
and date will be entitled to submit any 2020
Form of Sub-Proxy in respect of the Extraordinary
Resolution
Early Consent Deadline 11:00 a.m. (EST)
Deadline for Noteholders to deliver or / 4:00 p.m. (London
procure delivery of Electronic Voting time) on 14 October
Instructions or Forms of Sub-Proxy in 2020
favour of the Extraordinary Resolution
to the Tabulation Agent to be eligible
to receive the Consent Fee or the Termination
Fee, as the case may be.
Final Consent Deadline 11:00 a.m. (EST)
Deadline for Noteholders to deliver or / 4:00 p.m. (London
procure delivery of Electronic Voting time) on 23 October
Instructions or Forms of Sub-Proxy in 2020
favour of the Extraordinary Resolution
to the Tabulation Agent to be eligible
to vote but not to receive the Consent
Fee or the Termination Fee.
Latest time for Noteholders to appoint
the Tabulation Agent (or its nominee)
as proxy to attend the Meeting and vote
in respect of the Extraordinary Resolution
or to appoint another proxy to attend
and vote at the Meeting in accordance
with the provisions of the Trust Deed
and the Notice of Meeting.
Date of the Meeting 26 October 2020
Announcement of results 26 October 2020,
The announcement via the Clearing Systems or as soon as reasonably
of the results or notice of adjournment practicable after
of the Meeting, as the case may be. the Meeting
Effective Date The day the Extraordinary
The date on which the Waivers shall become Resolution has been
effective, which shall occur on the day passed
the Extraordinary Resolution is passed.
Settlement Date Expected to be five
Business Days after
(i) in the case
of the Consent Fee,
the date of the
Meeting or, as the
case may be, Adjourned
Meeting or (ii)
in the case of the
Termination Fee,
the Termination
Date
Payment (if any) of the Consent Fee or
the Termination Fee, as the case may be.
The Issuer or the Parent will make (or cause to be made)
announcements in connection with the Solicitation in accordance
with applicable law by delivery of notices to the Clearing Systems
for communication to Direct Participants and through (i) the
website of Euronext Dublin, (ii) the RNS and (iii) a website
maintained by the Parent. 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 last page of
the Memorandum. Delays may be experienced in respect of notices
delivered to the Clearing Systems and Noteholders are urged to
contact the Solicitation Agents 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 the
Memorandum.
Solicitation Agents
Any questions from any person regarding the terms of the
Proposal or the Solicitation may be directed to the Solicitation
Agents at the address and telephone number specified below:
CITIGROUP GLOBAL MARKETS LIMITED UBS AG LONDON BRANCH
Citigroup Centre 5 Broadgate
Canada Square London EC2M 2QS
London E14 5LB United Kingdom
United Kingdom In Europe and Asia:
Attention: Liability Management Attention: Liability Management
Group Group
Tel: +44 20 7986 8969 Tel: +44 (0) 20 7568 1121
Email: liabilitymanagement.europe@citi.com Email: ol-liabilitymanagement-eu@ubs.com
In the Americas:
Attention: Liability Management
Group
Collect: +1 (203) 719-4210
Toll free: +1 (888) 719-4210
Tabulation Agent
Noteholders may obtain copies of the Memorandum, the Notice of
Meeting and any announcements in connection with the Solicitation
from the Tabulation Agent:
CITIBANK, N.A., LONDON BRANCH
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
United Kingdom
By telephone: +44 20 7508 3867
By email: Citiexchanges@citi.com
None of the Solicitation Agents, the Trustee, the Principal
Paying Agent, or the Tabulation Agent (or any of their respective
directors, officers, employees, agents or affiliates) makes any
representation or recommendation whatsoever regarding the
Memorandum, or any document prepared in connection with it, the
Proposal, the Extraordinary Resolution or the Solicitation, or
expresses any opinion as to whether Noteholders should participate
in the Solicitation or vote in favour of or against the
Extraordinary Resolution. 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.
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END
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