NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
28 October 2020
RECOMMENDED CASH ACQUISITION
of
KAZ MINERALS PLC
by
NOVA RESOURCES B.V.
(a company indirectly owned by joint offerors (i) Oleg Novachuk and (ii) Vladimir Kim)
to be effected by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006
Summary
- The board of Nova Resources B.V. ("Bidco") and the Independent Committee of KAZ Minerals PLC ("KAZ Minerals") are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Bidco for the entire issued and to be issued share capital of KAZ Minerals (other than the KAZ Minerals Shares already owned or controlled by the Consortium) (the "Acquisition"). As at 27 October 2020 (being the last Business Day prior to the date of this announcement), the Consortium owned or controlled 186,079,209 KAZ Minerals Shares, representing approximately 39.39 per cent. of KAZ Minerals' issued share capital (excluding shares held in treasury) as at that date. It is intended that the Acquisition will be implemented by way of a scheme of arrangement.
- Under the terms of the Acquisition, KAZ Minerals Shareholders will be entitled to receive:
For each KAZ Minerals Share: 640 pence in cash
- The Acquisition values the entire issued and to be issued share capital of KAZ Minerals at approximately £3.0 billion, and represents a premium of approximately:
- 24.9 per cent. to the Closing Price of 512.4 pence per KAZ Minerals Share on 2 October 2020 (being the last Business Day prior to agreement having been reached with the Independent Committee);
- 12.1% per cent. to the Closing Price of 570.8 pence per KAZ Minerals Share on 27 October 2020 (being the last Business Day prior to the date of this announcement);
- 16.5% per cent. to the volume-weighted average price of 549.2 pence per KAZ Minerals Share for the one-month period ended 27 October 2020 (being the last Business Day prior to the date of this announcement); and
- 26.5% per cent. to the volume-weighted average price of 505.8 pence per KAZ Minerals Share for the six-month period ended 27 October 2020 (being the last Business Day prior to the date of this announcement).
- The cash consideration payable to KAZ Minerals Shareholders by Bidco pursuant to the terms of the Acquisition will be financed with the proceeds of the VTB Facility Agreement.
- If, on or after the date of this announcement, any dividend and/or other distribution and/or return of capital is declared, made or paid or becomes payable in respect of the KAZ Minerals Shares, Bidco reserves the right to reduce the consideration payable under the terms of the Acquisition for the KAZ Minerals Shares by an amount up to the amount of such dividend and/or other distribution and/or return of capital, in which case any reference in this announcement to the consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced.
- The KAZ Minerals Shares owned or controlled by the Consortium (being 186,079,209 KAZ Minerals Shares as at 27 October 2020, being the last Business Day prior to the date of this announcement) will not be Scheme Shares and will not be acquired by Bidco pursuant to the Scheme but will be acquired by Bidco pursuant to the Share Exchange Agreement. The registered holders of the KAZ Minerals Shares owned or controlled by the Consortium will not be permitted to vote such KAZ Minerals Shares at the Court Meeting, but will be permitted to vote such KAZ Minerals Shares at the KAZ Minerals General Meeting.
Recommendation
- The Independent Committee, which has been so advised by Citigroup and UBS as to the financial terms of the Acquisition, considers the terms of the Acquisition to be fair and reasonable. In providing their advice to the Independent Committee, Citigroup and UBS have taken into account the commercial assessments of the Independent Committee.
- Accordingly, the members of the Independent Committee intend unanimously to recommend that KAZ Minerals Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Acquisition at the KAZ Minerals General Meeting, as the members of the Independent Committee who hold KAZ Minerals Shares have irrevocably undertaken to do in respect of their own beneficial holdings totalling 719,026 KAZ Minerals Shares (representing approximately 0.15 per cent. of the existing issued share capital (excluding shares held in treasury) of KAZ Minerals on 27 October 2020 (being the last Business Day prior to the date of this announcement)). Further details of these irrevocable undertakings are set out in Appendix 3 to this announcement.
Irrevocable undertakings
- Bidco has also received irrevocable undertakings from Ferris, Denalot and Greenleas to vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Acquisition at the KAZ Minerals General Meeting, in respect of 28,245,449 KAZ Minerals Shares, representing, in aggregate, approximately 5.98 per cent. of the existing issued share capital (excluding shares held in treasury) of KAZ Minerals on 27 October 2020 (being the last Business Day prior to the date of this announcement).
- In total, therefore, Bidco has received irrevocable undertakings to vote, or procure votes, in favour of the Scheme at the Court Meeting and the resolutions relating to the Acquisition at the KAZ Minerals General Meeting in respect of 28,964,475 KAZ Minerals Shares in aggregate, representing approximately 6.13% per cent. of the existing issued share capital (excluding shares held in treasury) of KAZ Minerals on 27 October 2020 (being the last Business Day prior to the date of this announcement).
Background to and reasons for the Acquisition and recommendation
- The Consortium believes that there is a strong strategic rationale for the Acquisition, recognising that KAZ Minerals' focus on developing and operating large scale, low cost copper mines in Kazakhstan and the CIS region has enabled it to successfully progress a pipeline of growth projects, including its largest assets in Kazakhstan, Aktogay and Bozshakol. The Consortium also believes that KAZ Minerals' decision to dedicate efforts to a capital intensive strategy focused on long term growth remains the optimal long term strategic path for KAZ Minerals. The Consortium recognises this may be misaligned with the preference of many investors in the mining sector.
- Consequently, the members of the Consortium have concluded that KAZ Minerals' long term development of Baimskaya would be best undertaken away from public markets as a private company. Accordingly, the Consortium is offering KAZ Minerals Shareholders an opportunity to crystallise the value of their investment in KAZ Minerals Shares in cash at a premium to recent trading levels.
- In reaching its decision to recommend the terms of the Acquisition, the Independent Committee of KAZ Minerals has taken account of both the long term potential value of KAZ Minerals and the risks inherent in achieving this value. The Independent Committee believes that the Acquisition provides KAZ Minerals Shareholders with a fair value for KAZ Minerals' operating assets and development portfolio in Kazakhstan and Kyrgyzstan, and crystallises a value for Baimskaya that reflects the Independent Committee's view of the increasing risks in this project.
Information on Bidco and the Consortium
- Bidco is a Dutch private limited liability company indirectly owned by a consortium comprising of Oleg Novachuk (the current chairman of KAZ Minerals) and Vladimir Kim (a non-executive director of KAZ Minerals) (together, the "Consortium"). Bidco is a wholly-owned subsidiary of Vostok Cooper B.V. ("Holdco"), itself a Dutch private limited liability company indirectly owned by the Consortium. As at the Effective Date, Oleg Novachuk will indirectly own 36.5 per cent. of Holdco and Vladimir Kim will indirectly own 63.5 per cent. of Holdco.
- Oleg Novachuk and Vladimir Kim are joint offerors with respect to the Acquisition.
Timetable and Conditions
- It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (although Bidco reserves the right to effect the Acquisition by way of a Takeover Offer, subject to the consent of the Panel).
- The Acquisition will be on the terms and subject to the Conditions and further terms set out in Appendix 1 to this announcement, and to be set out in full in the Scheme Document. The Conditions include (among others):
- approval of KAZ Minerals Shareholders at the KAZ Minerals Meetings;
- satisfaction of certain Regulatory Conditions; and
- the sanction of the Scheme by the Court.
- It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and KAZ Minerals General Meeting, together with the associated forms of proxy, will be posted to KAZ Minerals Shareholders in due course and that the Court Meeting and the KAZ Minerals General Meeting will be held in December 2020 or early January 2021. The Acquisition is currently expected to become Effective in the first half of 2021, subject to the approval of the KAZ Minerals Shareholders, receipt of the relevant antitrust clearances and regulatory approvals and the sanction of the Scheme by the Court. An expected timetable of key events relating to the Acquisition will be provided in the Scheme Document.
Commenting on the Acquisition, Oleg Novachuk, Chairman of Bidco, said:
"We are pleased to announce this recommended cash offer for KAZ Minerals. Mr. Kim and I believe that KAZ Minerals has made notable progress as a public company since listing on the London Stock Exchange in 2005. However, driven by the current market uncertainty and the corporate circumstances of sequential development projects, we believe that KAZ Minerals' long term interests would be best served as a private company. We remain confident that the execution of a higher risk, capital intensive strategy remains the optimal long term path for KAZ Minerals, but we recognise that our risk appetite may be misaligned with the preference of many investors in the mining sector. In taking this important step, we wanted to ensure that KAZ Minerals Shareholders were provided with the opportunity to crystallise the value of their investment at a premium valuation. We are confident that this recommended Acquisition delivers an attractive return to KAZ Minerals Shareholders."
Commenting on the Acquisition, Michael Lynch-Bell, KAZ Minerals Senior Independent Director and Chair of the Independent Committee, said:
"Following extensive negotiations, the Independent Committee of KAZ Minerals intends to unanimously recommend the Acquisition to KAZ Minerals Shareholders as it represents an opportunity for KAZ Minerals Shareholders to realise their investment in KAZ Minerals at a premium in cash in the near term. We believe the offer provides a fair value for KAZ Minerals' operating assets and development portfolio, and crystallises a value for Baimskaya that reflects the Independent Committee's view of the increasing risks in this project."
This summary should be read in conjunction with the following announcement and the Appendices. The Conditions to, and certain further terms of, the Acquisition are set out in Appendix 1. The bases and sources for certain financial information contained in this announcement are set out in Appendix 2. Details of irrevocable undertakings are set out in Appendix 3 to this announcement. Certain definitions and terms used in this announcement are set out in Appendix 4.
Enquiries:
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Bidco / VTB Capital (Financial adviser to Bidco)
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Alexander Metherell
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+44 (0) 20 3334 8000
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Giles Coffey
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Elena Loseva
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KAZ Minerals
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Chris Bucknall, Head of Investor Relations
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+44 (0) 20 7901 7882
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Susanna Freeman, Company Secretary
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+44 (0) 20 7901 7826
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Brunswick Group (Financial PR adviser to KAZ Minerals)
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Carole Cable
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+44 (0) 20 7404 5959
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Charles Pretzlik
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Citigroup Global Markets Limited (Financial adviser and corporate broker to KAZ Minerals)
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Robert Way
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+44 (0) 20 7986 4000
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Tom Reid
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David Fudge
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UBS AG London Branch (Financial adviser and corporate broker to KAZ Minerals)
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Ian Hart
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+44 (0) 20 7567 8000
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Jason Hutchings
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David Roberts
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Clifford Chance LLP is acting as legal adviser to Holdco and Bidco.
Linklaters LLP is acting as legal adviser to KAZ Minerals.
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