Evraz Enters into a Share Purchase Agreement to Acquire up to 51

FOR IMMEDIATE RELEASE
Evraz Enters into a Share Purchase Agreement to Acquire
up to 51 per cent of Delong Holdings Limited
February 18, 2008, Luxembourg – Evraz Group S.A. (LSE: EVR) (”Evraz”) today
announced that it has entered into a Share Purchase Agreement (the
“Agreement”) with Best Decade Holdings Limited (“Best Decade”) and the
shareholders of Best Decade, to acquire from Best Decade up to approximately
51 per cent of the issued share capital of Delong Holdings Limited (“Delong”) over
an agreed period of time. This transaction is subject to anti-trust clearance by the
Ministry of Commerce (“MOFCOM”) and the State Administration of Industry and
Commerce (“SAIC”) of the People’s Republic of China (the “PRC”).
Share Purchase Agreement
The Share Purchase Agreement entered into between Evraz, Best Decade and the
shareholders of Best Decade includes an initial sale to Evraz of approximately
10.0 per cent of the issued share capital of Delong (the “Initial Sale”) at
S$3.9459 per share (the “Offer Price”). Best Decade has also granted Evraz a
call option to acquire an additional 32.08 per cent of the issued share capital of
Delong (the “Call Option”) that is conditional upon the satisfaction of certain
conditions. The Call Option is exercisable between the date of the completion of
the Initial Sale and ending after the date following 6 months immediately after 18
February 2008. Evraz has granted Best Decade a put option with respect to
32.08 per cent of the issued share capital of Delong (the “Put Option”),
exercisable between the date immediately after completion of the Initial Sale and
ending on the date falling six months immediately after 18 February 2008. Both
the Call Option and the Put Option have a strike price equal to the Offer Price of
S$3.9459.
In addition, the beneficial shareholders of Best Decade have signed an
undertaking to sell an additional approximately 8.97 per cent of the issued share
capital of Delong to Evraz at the Offer Price when certain restrictions in place due
to existing financing arrangements are released.
Following completion of these transactions, Evraz will control approximately 51.05
per cent of the issued share capital of Delong. Best Decade has an interest in
approximately 77.08 per cent of the issued share capital of Delong and will retain
an interest of approximately 26.03 per cent following this transaction.
In accordance with the Singapore Code on Takeovers and Mergers, Evraz will
make a mandatory cash offer for the remaining Delong shares at the Offer Price,
upon the exercise of the Call Option or the Put Option.
The maximum
consideration payable by Evraz will be approximately US$1,494 million, assuming
full acceptance of the mandatory offer, and the exercise of all outstanding
warrants.
Evraz expects that Delong will maintain its head office in Beijing and does not
envisage any material changes to the management of Delong following the
completion of the transactions. The management of both companies are excited
about the many areas of synergies between Evraz and Delong arising from
technology cooperation, joint procurement as well as cross selling and marketing
opportunities.
Commenting, Alexander Frolov, Evraz’s Chairman and CEO, said: “This
investment by Evraz in the Chinese steel sector, our first in the Asia Pacific region,
is a critical strategic move to expand our global footprint. The Chinese steel
market is the largest and fastest growing in the world. Delong has an established
position in the Hebei province, an important industrial region of China. Under the
leadership of Mr. Ding, Chairman and controlling shareholder of Delong, the
company has demonstrated an impressive track record of growth and profitability.
Mr. Ding brings exceptional operational expertise and local market insight and will
be a valuable partner for Evraz.”
Mr. Ding, Chairman of Delong, said: “I am proud of Delong's significant
accomplishments to date, and believe that this potential combination with Evraz
has much to offer both companies. Becoming part of a leading global steelmaker
with complementary strengths and markets, we expect to gain scale and more
growth opportunities in the current highly competitive steel environment. This
combination will provide us with the critical elements, to continue to grow the
business including a secure access to raw materials and substantial financial
resources. We believe that this transaction will also create new opportunities to
share technology, research and development.”
Merrill Lynch (Singapore) Pte. Ltd is acting as exclusive financial advisor to Evraz.
Allen & Gledhill LLP is acting as legal counsel to Evraz.
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For further information:
Evraz Group
Corporate Affairs and Investor Relations
Irina Kibina
Tel: +7 495 232 1370
[email protected]
Evraz Group S.A. is one of the largest vertically-integrated steel and mining businesses.
In 2007, Evraz Group produced 16.3 million tonnes of crude steel. Evraz Group’s principal
assets include three of the leading steel plants in Russia: Nizhny Tagil (NTMK) in the Urals
region and West Siberian (Zapsib) and Novokuznetsk (NKMK) in Siberia, as well as Palini e
Bertoli in Italy, Evraz Vitkovice Steel in the Czech Republic, Evraz Oregon Steel Mills and
Claymont Steel in the USA. Its fast-growing mining businesses comprise Evrazruda, the
Kachkanarsky (KGOK) and Vysokogorsky (VGOK) iron ore mining complexes,
Yuzhkuzbassugol Company and an equity interest in the Raspadskaya Coal Company. The
mining assets enable Evraz Group to be a vertically-integrated steel producer. Evraz
Group also owns and operates the Nakhodka commercial sea port, in the Far East of Russia.
Evraz vanadium operations comprise Strategic Minerals Corporation, USA, and Highveld
Steel and Vanadium Corporation, South Africa.
SGX-listed Delong Holdings Limited is a steel manufacturing group headquartered in
Beijing, People’s Republic of China. Its production base is located 430km southwest of
Beijing in Hebei Province, placing it in proximity to raw material sources and an extensive
client base encircled by the Bohai Economic Circle.
As a dedicated hot-rolled coil
manufacturer, Delong specialises in the supply of steel in such specifications for the
infrastructure, pipe-making, cold-rolled coil, machinery and automotive industries in the
People’s Republic of China. The Group also has interests in other synergistic businesses
such as resource investment. Delong has been listed on the Singapore Stock Exchange
since January 1, 2005.
For further information, please refer to Delong’s website at www.dlholdings.com
The directors of the Offeror (who may have each delegated detailed supervision of this
press release) has taken all reasonable care to ensure that the facts stated and all opinions
expressed in this press release are fair and accurate and that no material facts have been
omitted from this press release, and they jointly and severally accept responsibility
accordingly.
Where any information has been extracted or reproduced from published or otherwise
publicly available sources (including, without limitation, in relation to the Company or its
subsidiaries), the sole responsibility of the directors of the Offeror has been to ensure,
through reasonable enquires, that such information is accurately extracted from such
sources or, as the case may be, reflected or reproduced in this press release.
This press release should be read in conjunction with the full text of the
Announcement. A copy of the Announcement is available on www.sgx.com.