Member Info for shakhtar

Rastuss: Andrew Southam was a member on the Independent Committee that recommended the 640p offer to shareholders - read the announcement. It is precisely my point. How come the CEO, who is obviously Novachuk's second in command and has been so for over a decade, is on the "independent" committee? He is least independent of them all. But don't start me on the independent directors, too. Most of them approach the maximum allowed term for non-execs to serve on a board and their independence is as much in question as that of the CEO. They have disgraced themselves, particularly deputy chair Lynch Bell responsible for corporate governance, and I would not invest in any company on the board of which I will see those names in the future.

Rastuss, the Nova are not going to walk away from this, they just need to offer a fair price for us to accept, and 640p aint't it. I had a good look at the documents published with the announcement. Nova's VTB debt facility includes $2.99bn towards purchasing the shares in the offer. That translates to 790p per share! This is how much they went to the banks asking for, so this is what they believe this company is worth; this is how much banks gave them, so that's means banks have approved this valuation after a thorough due diligence; and this is how much they now can afford to pay. They cannot walk away now. They have sunk in $30m just in the debt arrangement fees and probably another $10m in advisory fees by now. That's a lot of money for them to spend and then just walk away in a hope they can try it on again a year later. It is now or never for them, and we as shareholders must make them pay the fair price, or at least the one they themselves are obviously ready to pay judging by the size of the facility they got. Give me 790p, thank you very much, and I may then reluctantly give up my shares. Not until then.

That announcement amounts to market abuse, surely! FCA should now get involved. And the Takeover Panel too should get a close look at how independent those directors on the committee are, particularly Andrew Southam. The company is hell bent on appeasing Kim and Novachok to help them steal it from us. It's not going anywhere! Shareholders revolt is coming.

https://www.ft.com/content/23d9dac5-ff9c-47b7-8061-e92d9067b389

Just bought 300k shares today. It's showing as a "sell", by the way, so can't trust the trades reporting system...
I think the company has an interesting strategy and is definitely worth a punt. Will add more if future newsflow supports the investment story. This is one to set aside for a long term and see what happens in 2-3 years time, or even more...
GLA

Cunningfox, you are right, but to get that bonus of a higher buyout price you need to not just keep your shares but also make sure you vote against the offer to force Kim to table a better offer!
And nothing is guaranteed, because if they don't, then we all keep our shares and then the price will revert to trading in correlation to where the copper price will be trading at that time...

Rasstus, the deal is being done through what is known as "scheme of arrangement". You can google it to educate yourself on how this differs from a "takeover offer" but in short, to get the deal done, the target company (KAZ) needs to go to the court and ask a permission to reorganise its capital in such a way that would give 100% ownership to the bidders (after they pay the offer price to other shareholders, of course). Bidders cannot vote at the court hearing, but other shareholders can, and for the deal to pass, 75% of voting shareholders need to vote for it. So if 25% of those able to vote (which equates to just over 15% of the issued share capital in KAZ case) vote against the deal, the scheme is rejected by the court, and no shares change hands. Every shareholder keeps their current shares and the company remains listed.
What you are talking about is a takeover offer, where bidders make an offer to shareholders to buy their shares at a predetermined price, and they, shareholders, can then either tender their shares into the offer or not. In a takeover offer, bidders would have a target - say, to achieve 75% holding - and the offer would be then successful if enough shareholders tendered their shares for the bidders to reach that target. And if reached, the bidders would then have those shares, and under UK law, if they got >90% or all shares, they can then execute a compulsory squeeze out procedure to make the remaining 10% sell their shares to them, thus reaching 100% ownership and then remove the company from listing.
Kim and Novachuk have chosen to do their deal via a scheme of arrangement (but they did say in the announcement that they might switch to a takeover offer at any time). So, if 15% of shareholders vote at the court hearing against the deal, K&N would need to either table a new, higher, offer and try to get it through the courts at a new hearing, or they could switch to making a takeover offer, also at a higher price, of course, but it's much harder for them to buy 100% and take the company private that way. This is because only 10% of shareholders not accepting their offer is needed for the company to remain listed (although it might be then demoted from a premium listing, but that's a different story).
Hope this helps.

Because another major shareholder with 3.6% just went public saying they too will be voting against the proposed offer. Now Russians are not happy with Kim and Novachuk buying this on a cheap. If more shareholders support the vote against, Kim would have to up his bid.

https://uk.reuters.com/article/uk-kaz-minerals-m-a-shareholders/more-kaz-minerals-shareholders-to-vote-against-buyout-plan-idUKKBN27R1MU

You are not alone hash. So am I, and a few others I know.

I suppose this is largely irrelevant now, but today's production results are great! I see the company beating their guidance for the year on all metals (which, incidentally, begs the question if the guidance was deliberately understated in the first place). On my estimates, the company should post EBITDA of $1.4bn for the year with net debt dropping to $2.5bn. That would make the offer from shareholder valued at 4.6x EV/EBITDA compared to copper miners currently trading on an average multiple of 7.5x. Next year, at current commodity prices, and before Aktogay II even comes into operation, the company should deliver EBITDA of $1.65bn with net drop dropping to $1.8bn. That places the offer at 3.5x forward EV/EBITDA when copper peers are trading on a forward multiple of 6.0x! Not to mention that once Aktogay II is launched EBITDA will top $2bn. Baimskaya aside (did independent committee even consider an option of shelving it?), the numbers support a valuation of 1300p!! with no discount to peers, or 1040p with a generous 20% discount. Does anyone else think we are getting fleeced by Kim & Co or am I missing something?

I usually agree with what Tucson posts, but not this time. I think the fair value is at least 900p, with all risks accounted for, so the offer we've got is some 30% undervalued. And no, they could not have done this 6 months ago at 260p, as it probably took them at least 6 months to put this together, if not longer. I would bet they had this in mind since they bought Baimskya, if not before. I just wonder why would Abramovich agree to vote for this deal when he got his shares at 850p?! And all this financed by a Russian bank. I must say it smells like this was all part of a plan to overburden the company by purchasing Baimskaya and drive the price down to get it on a cheap. Honest investors have been duped by a cleverly disguised raid on KAZ by the Russians with the support of Kim and Novachok. I was giving these guys the benefit of a doubt before, but it look like Rastuss was right all along. Once a crook always a crook. And looks like Andrew Southam and so-called independent non execs are all in cahoots. Shame!

Where did you get this from, Auto? I’ve not seen any news on a partner and I remember they said they would be building a camp and a landing strip but that’s about it. Baimskaya is a huge project and it would take at least couple yeas before they actually start building. We should get a feasibility study result in a few months and that should provide some clarity on the budget and a timeframe, and if the results are good - and that’s a big IF at current copper prices - then they would need to find money, which may also prove difficult given the company’s highly leveraged position. I’m sure in the end they’d need to get a rich partner on board to get the project off the ground, if they want to move it quicker. And didn’t they say that the government has to build the power and road infrastructure first? All this takes time, years in fact. I don’t understand what’s all the fuss about this Baimskaja - Kaz should make a few billion from current projects and would pay down quite a bit of the current debt before they can actually start building this. Otherwise they’d be forced to get a partner of forced to put the project on a slow burner. And if copper prices rise their should be more money to increase the divi which I agree is miserably low. The fundamentals look good for Kaz and not reflected in its price. It should he at least 7-8 quid even at these copper price levels. Happy to hold for a few years and trade part of my holding in and out in the meantime to profit from volatility. GLA

I have to disagree here Rastuss. The independent banks would actually consider this type of government "support" a risk rather than a positive. After all, such support, if abused, may result in a loss of assets to the state-owned banks, so western banks would be concerned to lend alongside, even if they have priority security over these assets. I firmly believe the western banks provide lending to Kaz the merits of its business plans and security of future cash flows. They were obviously provided with information on the company's future plans during the due diligence which they were happy with, and this suggests to me that there are positive news to come. Hopefully soon.

And the fact that Kaz needs so much debt is not surprising at all given the Aktogay expansion capex and accelerating debt repayments on Chinese loans. This loan helps them extend debt maturity profile and do so at a low cost - something equity investors should be happy about as ultimately cheap, yet serviceable, large debt would translate to higher equity returns that investors could otherwise expect from a capital structure that relies on low debt and equity dilution. The big shareholders in Kaz clearly know what they are doing and I'm happy to ride along.

Rastuss, the ability to raise new debt is entirely dependent on the company's free cash flows and risks associated with Baimskaya, among other risks. I know you've been saying that the major shareholder can "convince" Kazakh banks to advance new loans, but when 19 "Western" banks (including European, North American, Japanese and Chinese) commit a billion of new money (which they said was significantly oversubscribed), that to me means that 19 separate credit committees looked very closely at the company's future cash flows (over at least next 5 years) and assessed all the associated risks, including no doubt Baimskaya, and not to mention the already huge debt pile, and then were happy with all those to give the company another billion. That is a huge vote of confidence, don't you think? And from a very diverse group of banks, which tells me much more than the production report or the financial results we are all waiting for would. Massively positive news!

Great news. While equity funds are being skeptical, the banks are clearly loving the business. That's 700 million fresh liquidity, not to mention that this year's debt repayments will be 200 million lower, providing effectively 900 million of new funds. That surely addresses any worry about being able to cope with debt for at least 2 years if not more.

It’s not that unusual. For example KAZ cfo is also not on the board

BOAML dropped their target to 130 yesterday, btw, from 150 only a day before...

I just read both their reports (Barclays and BOAML). Basically they both see v.sharp drop to pellet premiums to $35/t (spot is apparently even lower) and decline in sales (evidenced this quarter, but also with Vale) and build up of inventories, whilst at the same time expecting further appreciation of UAH v USD (owing to economic growth in Ukraine ahead of expectation) putting pressure on costs. Barclays even reduced capex estimate in their forecast by $100m to offset a massive drop in cashflow. And on top of this both site "Zhevago problem" as a contributing factor. In other words, a perfect storm of negative events coming together.

One of the even ventured to suggest that Zhevago might sell down, and if sells below 30%, PXF repayment will be triggered. They do speculate, however, that Zhevago has increasing need for money so the dividend should stay high.

It all reads a bit gloomy, but what do the know! I must be an optimist, because I added first thing this morning at 143.

GLA

Zhevago is a terrible CEO - at least from transparency and governance perspective - and should quit. Loss of money, shady charity dealings, now this. He is clearly dodgy as hell. If he wants to maximise the value of his business, he should resign and let a professional run the company, and the board needs to be cleaned of the "yes boss" people and replaced with proper independent people who know where their duty lies.

Who says the prosecutor did not follow the proper process? Zhevago's lawyers. Of course they would.

I am not not saying that the prosecutor did. I don't know. Nobody knows. Certainly the company does not, and should not just take a word of its CEO that he did not receive a notice "in accordance with Ukrainian law" (so, did he receive one at all, even if the legality of it is disputed?) as the truth and then go for a whole paragraph about how this hurts his business and affect their investment policy.

The company is a legal vehicle quite distinct from its director and/or shareholder and should act accordingly. The company should protect itself, not its CEO. And this is a duty of non-execs to ensure it does so. With this RNS it is a blatant failure of NEDs duty to the company and to its general pool of shareholders.

As a shareholder I am now concerned that the company will continue to support its CEO even if it turns out (the court will prove) that he was served a notice correctly, and then turns out that he was guilty in what he is accused of.

And let's not forget the $178m lost in CEO's bank. That was shambolic. A total failure of treasury policies to keep money spread across AAA-rated banks with proper limits per bank set up. Or was it not a failure of the treasury but an error of the CEO's making? I wonder....

You obviously know nothing about the company to post a strong sell recommendation.