Translated material
Evraz is being slightly privatized
The Ukrainian group will receive almost 10% of the Russian company
Evraz Group yesterday announced details of the transaction with the Privat group, owned by the main shareholders of the largest Privatbank in Ukraine, Gennady Bogolyubov and Igor Kolomoisky. $1 billion will be paid for six Ukrainian enterprises. In return, as stated in the documents of the participants in the transaction, Privat will receive almost 10% of the share capital of Evraz Group. At the same time, the Evraz press release speaks of only five enterprises for which $2-2.2 billion were paid (of which about $1 billion was in cash, the rest in group shares).The assets acquired in Ukraine were purchased by the main shareholder of the Russian group - Lanebrook Limited , the beneficiaries of which are Roman Abramovich, Alexander Abramov and their partners. During the transaction, 99.25% of the shares of the Sukhaya Balka Mining and Processing Plant (produces 3.75 million tons of sinter ore per year), 95.57% of the shares of the Dnepropetrovsk Metallurgical Plant named after. Petrovsky (1.8 million tons of pig iron and 1.23 million tons of steel per year), shares of more than 90% in three coke plants - Bagleykoks, Dneprokoks and Dneprodzerzhinsk Coke Plant (total produce 3.52 million tons of coke per year). The message from Privat and Lanebrook also includes a 50% stake in the Southern Mining and Processing Plant. But in the Evraz press release there is not a word about its acquisition. As a source familiar with the details of the deal explained to Vremya Novostei, “all assets, except for the Southern Mining and Processing Plant, will be transferred to the balance sheet of the Evraz group.” “No decision has been made regarding the Southern Mining and Processing Plant yet,” he said.
In addition, the documents of Privat and Lanebrook indicate that the Ukrainian group will receive 34.5 million GDR of Evraz Group, which is 9.72% of the share capital of the Russian group. The final terms and structure of the transaction must be approved by the Evraz board of directors based on the opinion provided by the international organization of appraisers. Evraz Group plans to complete the transaction in the first quarter of 2008.
“We view these acquisitions as another important stage in the implementation of our strategic plans,” said Alexander Frolov, Chairman of the Board of Directors and President of Evraz Group. “With this purchase in Ukraine, our level of self-sufficiency in iron ore raw materials will increase and the integration of Evraz Group into the mining segment will continue.” According to him, coke-chemical enterprises will create additional opportunities for the sale of coal produced at mines owned by Evraz Group.
Analysts agree that Evraz did not overpay for the assets. However, Dmitry Smolin from Uralsib believes that if the group also consolidates 50% of the shares of the Southern GOK, the transaction price could increase by $1.5 billion, since the securities of this GOK are actively traded in Ukraine, and its capitalization is $2.734 billion The analyst valued the Evraz group itself at $28.8 billion.