TIDMPOG
RNS Number : 5933G
Petropavlovsk PLC
18 March 2020
18 March 2020
Petropavlovsk PLC
Preliminary Agreement for the Proposed Termination of IRC
Guarantees and
the Disposal of 29.9% of the Company's Interest in IRC
Petropavlovsk PLC ("Petropavlovsk" or the "Company" or, together
with its subsidiaries, the "Group"), announces that it has today
entered into a preliminary agreement ("Agreement") with Stocken
Board AG ("Stocken"), a Liechtenstein-incorporated investment
company, setting out the non-binding terms on which Petropavlovsk
would sell to Stocken a c.29.9% shareholding in IRC Limited ("IRC")
(of Petropavlovsk's 31.1% shareholding), subject to certain
conditions precedent being met, including the release of the
Group's obligation to guarantee IRC's loan facilities with
Gazprombank.
This preliminary agreement includes the proposed terms on which
Stocken would agree to purchase from Petropavlovsk 2,120,922,527
IRC shares (representing 29.9% of IRC's outstanding shares at
today's date), for a cash consideration of US$10 million. Under the
terms of the guarantees and related agreements, Petropavlovsk
requires the consent of Gazprombank ("GPB") to enter into a binding
share sale and purchase agreement ("SPA") in relation to the IRC
shares.
If the consent of GPB is received and the parties enter into a
SPA, completion of that SPA will be conditional upon:
-- Termination and irrevocable release of the Group from all
loan guarantees given to Gazprombank ("GPB") under the facility
agreements signed between Kimkano-Sutarsky Mining and Beneficiation
Plant LLC , a subsidiary of IRC and GPB in December 2018
("Guarantees"); and
-- The receipt of any consents that may be required under the
Company's US$500 million 8.125% notes maturing November 2022
("Notes"), or confirmation by the Board that none are required (the
date of "Consent").
If a SPA is entered into ("Signing"), the release of the
Guarantees ( or at least the execution of legally binding
agreements which provide for the termination of such), is expected
to be achieved within 180 days from the later of Signing and
Consent, or such later date as agreed by the parties, failing which
the agreement will terminate.
If Stocken is unable to demonstrate satisfactory progress in
meeting this deadline within 90 days from the later of Signing and
Consent, and which it cannot resolve within 10 business days, any
SPA may be terminated by Petropavlovsk on 5 business days' notice
provided that Gazprombank has not released or agreed to release
Petropavlovsk from the Guarantees by this time.
Under the preliminary agreement, it is proposed that following
Signing, the shares held in IRC by Petropavlovsk will be
transferred to Stocken within 10 business days of the later of the
Guarantees being released and Petropavlovsk's noteholders
consenting to the transaction, if required ("Completion"). A cash
consideration of US$10 million is payable by Stocken for the 29.9%
shareholding up to 31 December 2021 ("Consideration"). The
Consideration will be subject to adjustment if IRC undertakes a
share or other capital issue at less than the market price of the
shares at the date of the Agreement but prior to Completion.
Under the preliminary agreement, it is proposed that the SPA
will include a put option ("Option"), which may be exercised by
Stocken, to provide them with a period of time to complete
additional due diligence in relation to their equity investment in
IRC. It is not proposed that the Option may be exercised should
there be a deterioration in IRC's performance (as outlined below)
and thus would incorporate downside protection for
Petropavlovsk.
The proposed Option is proposed to be capable of exercise by
Stocken between the date of Completion and full payment of the
Consideration or 31 December 2021 (whichever is the earlier).
Should the Option be exercised by Stocken, the 29.9% shareholding
in IRC will be returned to Petropavlovsk and any Consideration paid
up to that date will be returned to Stocken. There would be no
effect on the guarantee release and the IRC shares which
Petropavlovsk transferred to Stocken upon Completion will be
returned to Petropavlovsk without the Guarantees attached.
The proposed Option would also provide downside protection to
Petropavlovsk in the event of a deterioration in IRC's financial
performance during this period, whereby the exercise of the Option
is wholly dependent upon IRC's financial performance remaining
within the following thresholds: (i) a net debt of less than US$275
million, (ii) a net debt / EBTIDA ratio which is 35% above that on
the date of the Agreement, or (iii) a market capitalisation which
does not fall below 50% of the market capitalisation as at the date
of Signing. Should any of these thresholds be breached, Stocken
would not be able to exercise the Option.
Whilst Stocken and the Company have entered into the preliminary
agreement, there can be no certainty that GPB will consent to
Petropavlovsk entering into the SPA, the terms of the SPA and
whether GPB will agree to release the guarantees or the terms on
which it will agree to do so.
Petropavlovsk's remaining 84,977,473 shares in IRC, equating to
an interest of c.1.2%, are not proposed to be subject to the
SPA.
Dr Pavel Maslovskiy, CEO of Petropavlovsk, comments:
"We are very pleased to announce that we have agreed terms for
what would be the first stage of a potential transaction which is
one of a number of opportunities we have been exploring to relieve
the Company from the loans it currently guarantees on IRC's behalf,
while realising a fair and reasonable value for our
shareholding.
The guarantee has a negative impact on our credit rating which
increases the cost of our debt. We expect that the release from the
guarantee would improve the Company's credit profile and assist the
ongoing momentum of Petropavlovsk's equity and debt re-rating. As a
result, we believe that the US$10 million cash consideration
proposed represents a fair and reasonable value for our holding in
IRC given that it would enable us to relinquish the guarantees and
enable us to focus on the successful implementation of our strategy
which is to consolidate our position as a leading Russian gold
miner with the ability to process a wide range of refractory gold
ores.
I look forward to working with both Stocken and Gazprombank to
enter into the SPA and ultimately successfully complete this
transaction".
The information contained within this announcement is considered
by Petropavlovsk PLC to constitute inside information as stipulated
under the Market Abuse Regulation (EU) No.596/2014. Upon the
publication of this announcement via a Regulatory Information
Service, this inside information will be considered to be in the
public domain.
About Petropavlovsk
With a Premium Listing on the London Stock Exchange,
Petropavlovsk (LSE: POG) is a major integrated Russian gold
producer with JORC Resources of 20.52Moz Au which include Reserves
of 8.21Moz Au.
The Company's key operating mines (Pioneer, Malomir and Albyn)
are in the Amur Region in the Russian Far East and the Company has
produced a total of c.7.6Moz of gold since operations began in
1994. Petropavlovsk has a strong track record of mine development,
expansion and asset optimisation.
The Group recently entered a new era of growth following the
successful commissioning and start-up of its flagship asset, the
Pressure Oxidation (POX) Hub at Pokrovskiy, which enables the
processing of the Company's abundant refractory reserves and
resources.
Petropavlovsk is committed to implementing international best
practices across all areas of sustainable development and is one of
the region's largest employers and contributors to the local
economy.
For More Information
Please visit www.petropavlovsk.net or contact:
Petropavlovsk PLC +44 (0) 20 7201 8900
Patrick Pittaway / Max Zaltsman / Viktoriya TeamIR@petropavlovsk.net
Kim
Peel Hunt LLP
Ross Allister / David McKeown / Alexander
Allen +44 (0) 20 7418 8900
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor / James Asensio +44 (0) 20 7523 8000
Buchanan +44 (0) 20 7466 5000
Bobby Morse / Kelsey Traynor / Ariadna POG@buchanan.uk.com
Peretz
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
DISEAPDPFESEEEA
(END) Dow Jones Newswires
March 18, 2020 04:08 ET (08:08 GMT)
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