Member Info for ViciousHippo

We have a number of factors against us and a number of factors for us.

Factors against:
1 politicians braying for oligarch and Rissian blood at any price for UK Plc reputation for the process of law and property rights
2 FCA desire to get rid of the Evraz headache
3 Oligarchs desperate to rescue their assets somehow

Factors for us
1 Oligarchs don't want the value of Evraz to be permanently reduced by doing something underhand, especially if there is an alternative. If they screw us, who would want to invest in evraz in the future. Nor would they want to do something that undermines their ability to do business generally in the future.
2 FCA have a duty to regulate businesses so that they behave correctly. And a duty to protect investors, particularly minority investors
3 The FCA is mindful to keep control so that they can monitor sanctions on RA shareholding are being observed.
4 City institutions with trends of millions invested will lobby the FCA furiously if they smell a rat.

The company is profitable and has cash. The simplest thing MIGHT be for the FCA to rubber stamp a reasonable offer of a minority share buy back by the company, in return for it being allowed to delist and move out of the UK. The downside would be they lose oversight of RAs shareholding. However it ticks many boxes. The reasonable offer would be an amount that the current institutional shareholders could accept. £3.50?

If Evraz move residence it will be to a friendly country. US may be friendly towards Evraz NA but not towards oligarchs. I would anticipate Turkey, India, Israel or China.

It would be complicated. In any case I believe that FCA have to approve any delisting or restructuring that affects minority shareholders. I have no idea which way they would jump. On the one hand there is political pressure to remove Russian companies, on the other they have a duty to protect investors.

The three main negatives I can see are

1 EU market is subject to sanctions, so that's a 4% reduction.
2 Currency fluctuations. Hard to say how that is affecting profits.
3 Banking problems. Cash may not be able to be moved from Russia.

On the poditive side are high commodity prices as you say

Lots of variables. Company management have their hands full that's for sure.

Wolf - if your wrapper doesnt allow the shares, hold them in directly in your name. If you set up your own company to do window cleaning services, you own the shares directly.

After this experience I think it is likely the oligarch shareholders will want the company to be moved to a friendlier jurisdiction than the UK. Oligrach friendly exchanges jurisdictions would include Turkey/ India/ China. If it did move, the company might list on another exchange, or it might not. If the company is not listed your capital is locked in. However its dividends are so good, that you get your money back pretty quickly. And it could get taken over and your shares purchased. Just like any other private company. They are not worthless, just less liquid.

Spider you ask about dividends. The copmany pays dividends to its shareholders personal account. If you happen to own the shares in a wrapper, then they will be paid to that wrapper. It has absolutely no connection whatsover to being listed on the LSE, or even being resident in the UK.

A large dividend would encourage institutions back into investing, supporting the share price upwards.

Arakhamia praised the role of the Russian oligarch Roman Abramovich in the peace talks, saying he had initially acted as an “unofficial back-channel of communication” and was now trying to act more as a neutral mediator between the two sides.

Çavusoglu also said the former Chelsea football club owner was “playing a useful role”, while the Turkish president, Recep Tayyip Erdogan, said Abramovich plainly had Putin’s trust and was “sincerely trying” to end the conflict.

It is my belief the UK will purposely drag its feet on sanctions, in order to keep debate on Ukraine going. This is all to keep Ukraine "alive" and so to keep Boris Johnson playing the interenational statesman, to deflect from Partygate. It's all about Partygate and Johnson's personal ambition to stay in the job. Truss is just jumped on the ride, so she can sound powerful. Truss is thick as mince, doesnt even know her geography. The Russians said this
"another senior Kremlin official dismissed British diplomacy as “absolutely worthless”

ps Truss and her opposition to Russians, does not extend to their money for her slightly unsavoury personal ambition:
https://www.thenational.scot/news/19945488.russia-ukraine-crisis-liz-truss-exposed-car-crash-interview/

I know right!

What about the one where Russia is evil for invading a sovereign nation on a pretext, but we are noble for invading a sovereign nation on a pretext (remember weapons of mass destruction?).

Oops pressed return in error. Can you edit posts? Anyway to finish, we need
1 End of war
2 Unsanctioning of RA
3 Statement from management that the group will stay UK resident.

Then we might back to not only £5, but £7+

The shares will not trade at anything like their value until RA is unsanctioned. The capital structure of the cmpany is severely compromised, including the payment of dividends, its capital value (no other company can - or would want to - mount a takeover) and the ability to do things like this demerger. Furthermore it is currently tainted in the eyes of UK Plc.

Another risk is that management decide that it would be better to move to a friendly jurisdiction. Get away from the new concept of the UK as a place where businesses and property rights can be destroyed in an afternoon of braying MPs; the stuff of banana republics. If the company comes up with a definitive statement to the contrary, then fine, but until it does, the future remains uncertain. Uncertainty = lower share price.

So after this excellent news, we still need
1

Yes xenophobia is never a good idea. We aren't even at war with Russia. Did Russia ban all things UK when we invaded a sovereign nation on a pretext? (Remember weapons of mass destruction?)

I am still new to mining investments, but I liked to profile of Rambler. I have been trying to work out the future EBITDA assuming all goes well. I have the following guestimates based on what I have understood. Anyone more eperienced can comment/ put me right?
Date 01/01/2022 31/12/2022 31/12/2023 31/12/2024 31/12/2025 31/12/2026
EBITDA (7,000,000) 2,250,000 11,000,000 11,000,000 15,000,000 16,000,000

Thanks!

The fit and proper test applies to directors running a company on behalf of shareholders. There is no equivalent test for investors (ie shareholders)

Evraz is bigger than Poly, so its movement will be slower - you need the big institutions investing, and they are still shunning anything Russian. Also Evraz has been subject to indirect sanctions via RA, that hamper its investors from receiving any value from their holding, such as dividends. The west have said sanctions will be reimposed immediately if Putin doesnt keep to any peace deal. Anything that relies on Putin behaving will keep big investors well away.

In any case RA has had his fingers burned by this. What that means is we dont know what he will do. Will he just trust to luck that Putin doesnt do it again, or will he arrange his affairs so he is well away from the west. If so, what does that mean about his shareholding. Again, more uncertainty. Big investors will be reticent.

So while I expect an easy doubling or tripling of the share, I think higher multiples will take time, while the governmental assault on property rights is digested by everyone, but mainly RA.

U.S., allies to aim sanctions at more Russian sectors, supply chains
https://www.reuters.com/business/us-allies-aim-sanctions-more-russian-sectors-supply-chains-treasurys-adeyemo-2022-03-29/

I would say there is a still a chance that Evraz gets targetted, so it remains sqeaky bum time. However, the latest Russian concession that Ukraine can join the EU suggest real progress in the narrative, and also implicitly suggests Russia accepts Ukraine independence. So perhaps we are about to turn a corner, and more sanctions will not come to pass.

By the way, without wanting to be controversial, I have a question that is puzzling me. The west have gone nuts over Russia invading a sovereign country under the pretext of liberating it and the threat of Neo Nazis. However, did we not invade a sovereign country under a pretext too - Iraq and weapons of mass destruction? I appreciate there are differences, but there are also similarities, no?

Offer to go private is impossible with RA shareholding frozen. They can't make any changes to the capital structure without falling foul of sanctions rules banning any transactions in securities with RA (not just evraz ones either).

Sanctions and suspension are actually keeping us safe for now, if entirely in the dark.

When sanctions are lifted from RA, the whole shooting match can go back to normal, and there is little reason for Evraz to make changes as the share price will go back up and RA will be happy. Evraz retain access to the capital markets and may be in a great position to grow even faster.

Who knows. But truly no point in writing about it - too many variables

OFSI put out a clarification on Friday, of I recall correctly, that control meant personal control by a sanctioned person, and could never be combined control by more than one sanctioned person's shareholding aggregated together. The caveat is if one person has effective control, eg son and daughter shareholdings etc.

Evraz is highly unlikely to fall foul of these rules. If OFSI was really going to challenge the company, it almost certainly would have done so by now. Furthermore the company (external) lawyers would have piped up if they thought the directors statement was fishy. Nothing in it for them to be party to a lie.

I don't know what Raven did, but there are clear rules in company law about minority shareholders not being shafted by majority shareholders. Minority shareholders have to be made an offer which they vote on.

You can worry about too much you know