Evraz Takes Indirect Controlling Interest in Coking Coal Producer
10/08/2012 - Russia's EVRAZ plc announced that it has agreed the terms of the acquisition of an indirect controlling interest in coking coal producer OJSC Raspadskaya and its subsidiaries.
Russia's EVRAZ plc announced that it has agreed the terms of the acquisition of an indirect controlling interest in OJSC Raspadskaya and its subsidiaries.
EVRAZ has agreed to purchase a further 50% interest in Corber Enterprises Limited from Adroliv Investments Limited, a company owned by the sellers, which holds an 82% interest in Raspadskaya. EVRAZ has an existing holding of 50% of Corber and, following completion of the acquisition, will hold an indirect interest of 82% in Raspadskaya’s shares. The remaining 18% of Raspadskaya's shares will remain listed on the Russian Stock Exchange, MICEX-RTS.
Completion of the acquisition is expected to occur in Q4 2012 subject to receipt of customary regulatory approvals and satisfaction or waiver of other conditions.
Raspadskaya is one of Russia’s largest producers of coking coal based on volume of production in 2011 and is located in the Kemerovo region of the Russian Federation. Raspadskaya is already a key supplier of coal to EVRAZ and EVRAZ is Raspadskaya’s largest customer.
According to the international consulting firm IMC, as of 31 December 2011, the total proved and probable coal reserves of Yuzhkuzbassugol, EVRAZ’s producer of coking coal, were estimated to be approximately 632 million tonnes. As of 31 December 2011, according to IMC, Raspadskaya had proved and probable coal reserves of 1,314 million tonnes.
Alexander Frolov, CEO, EVRAZ plc, commented, “The acquisition will increase EVRAZ’s coking coal self-coverage, which is consistent with EVRAZ's stated strategy of growth in the raw materials for steelmaking.
“Raspadskaya is already a key supplier of coal to EVRAZ and EVRAZ is Raspadskaya's largest customer. Through holding an equity interest in Raspadskaya since 10 March 2004 and having directors on the Board of OJSC Raspadskaya, EVRAZ has a clear understanding of the strengths and potential of Raspadskaya's business and is best positioned to benefit from acquiring an indirect controlling interest in Raspadskaya.
“Following completion of this acquisition EVRAZ will become the largest producer of coking coal in Russia. We believe that the acquisition of Raspadskaya will generate substantial operational synergies to EVRAZ, including the optimal use of different coal grades in the combined portfolio.
“We value the strong expertise of the management team and we are happy that Mr Kozovoy, who has been the chief executive officer of Raspadskaya since December 1993, and has successfully helped to transform it into one of the largest coal mining companies in Russia, will stay in this position until at least the end of 2013.“
