Member Info for ViciousHippo

The asset freeze means nobody can transact with RA on respect of his shares, eg actually buy them or facilitate him in any way. The suspension does not add anything to that - no broker would be allowed to assist him in selling his shares. But of course being suspended does make that a certainty.

I am not sure how 100% ownership is much preferable to the current 70% ownership. Control is control.

They may have cash but they alo have a lot of debt, about the same as cash. The banks might call in the debt if they are nervous about the company going off grid/ to Russia, then the company would have a different problem.

Any solution to this is complicated. The company can still trade fairly normally. It cannot sell to the EU and the banking sanctions will be causing difficulties, however it can still do the majority of its day to day business. Right now the isimplest solution is to ride things out. Should things then a Plan B will need to be instigated, and I am sure that is being worked on.

The FCA is there to regulate the market, in order to protect all investors from abuse. RA being sanctioned makes for a difficult shareholder environment - the company cannot do normal things like pay a dividend. The FCA has suspended the shares to giv time to clarify how this will work in practice, as well as how to ensure RAs shares are not trasferred in any way.

It's not simple when it is illegal to enter into a securties transaction with RA. None of his shares may be transferred, and he may not be issued new shares. I think a share buy back would be simplest. Evraz would make a tender offer. However what is the benefit to the company? It can "go private" simply by delisting. Any company not lsited is private, and we would be shareholders in a private company. However that doesnt solve much does it?

Without consulting a solicitor I suggest the answers are:

1. The government have not denied access to your investment. You were and remain a shareholders with all your rights in tact

2 the FCA suspended the shares not the government. They have stated their reason - to give time to clarify implications of the sanctions on RA on investors.

3. Very little at this stage as you have suffered no loss from a temporary suspension. Should something be done that does cause you actual financial loss, then you could put together a case

Delisting has not happened, or been mentioned, so there is no case to answer.

No the directors probably don't really care about the temporary suspension. Their priority is 1) keep the business going and 2) remain profitable

My question to you is - why do you care about the suspension. Every day nothing happens is a day closer to the end of all sanctions.

There is a lot of talk about delisiting or Evraz listing in Moscow (eg Investors Chronicle article). We can all hear the political pressure to rid the UK of anything Russian. If Evraz were to delist, it becomes a UK private company. If it lists in Moscow it stays a public company, albeit a Russian one. Alternatively it has been suggested it could list in the Far East.

However there is a downside to delisting for the UK government. If Evraz is delisted, or lists elsewhere, the FCA lose control over the company, and therefore also control over RA's shareholding. I dont think they would find it easy to police RAs shareholding if it was listed in Moscow, do you? That is a very good argument to keep it listed in the UK - so the FCA can be a reliable steward of sanctions.

So on the side of the argument we have shrieking MPs wanting everything Russian removed from the UK, and on the other side of the argument, a practical way of policing RAs sanctions. When looking at those two arguments, we all know shrieking MPs move on to shrieking about something else soon enough; just witness Partygate which was THE MOST IMPORTANT THING IN THE WORLD only a few weeks ago, and it is all forgotten now.

In order to police RAs shareholding, far better to have the company listed in the UK. Suspension is actually the best of both worlds - oversight and it ties the hands of the Russian shareholders. I would not be surpirised if the suspension will continue until sanctions are lifted, which could be a while. Or at least until MPs are shrieking about something else, which wont be long.

RA is not allowed to sell his shares.

Hargreaves landfown

And another day closer to sanctions being lifted. At least by the US. I do believe we will get through this if the FCA can find a way to accommodate RAs shareholding and doesn't buckle to media pressure.

OFSI might not want to respond - it's not in their interest. They might want to keep their options over.

The longer it takes, the longer Evraz can keep trading as close to normal as possible. There is no downside to waiting.

Yes, but as a minority shareholder you dont have much say in anything. The big shareholders could vote for a deal you dont like and there would be nothing you could do about it. Nonetheless, assuming everyone plays fair, then you are due your share.

Not if we cant trade in Russia due to the latest sanctions rules. Otherwise yes it might be ok.

Space - a private company is simply one that is not listed on a stock exchange. So Evraz, as is, with all its current shareholders, would become a private company.

No. On a delisting you are not selling your shares. You will hold them in a private company

Alternatively they could shut Russia down. Not easy to do - there are tens of thousands of workers living in remote mining towns. See Google Earth link of our biggest mine asset EVRAZ ZSMK.
https://earth.google.com/web/@58.69466724,59.48962477,358.35686742a,20726.00417742d,35y,123.78890739h,45.12849649t,0r

Pity our CEO trying sort out this ****show

I am trying to work through what our problems are. The sanctions rules state:

(4) For the purposes of this regulation, being “involved in obtaining a benefit from or supporting the Government of Russia” means—
(b)carrying on business of economic significance to the Government of Russia;
(c)carrying on business in a sector of strategic significance to the Government of Russia;

Reading that, although so far Evraz has avoided being listed as under sanction, I think Evraz has a high chance of being caught by these. This would mean it cannot run the Russian business. Then what?

The obvious way out would be to sell the Russian assets (difficult) or demerge them into a Russian holdco, and separating them from all the other assets eg USA/ Canada/ Khazakstan . A demerger is difficult to contemplate however, due to RA's frozen shareholding. I cannot see how you can legally demerge if you cant issue shares to all the shareholders in proportion.

I cannot readily think of a way out. Sadly I dont think an end to the war will solve anything on these particular rules - I think they will stay in play for a long time. For now Evraz has not been specifically sanctioned, but they are probably having talks with the government on how to save the non-Russian business, given the severe restrictions they have with RA's shareholding. I cannot see RA giving that up in the same way he did Chelsea, so we are at an impasse. If the remainign directors gfet cold feet for falling foul of the rules, and they then resign, we are stuck with a copmany that cannot continue. Then it would presumably be put into forced liquidation. I really dont know to be honest. I guess we will get a communication from the FCA in due course.

Looking at the latest rules on sanctions, these are quite tough. See the bits about "carrying on business in a sector of strategic/economic significance to the Government of Russia ". What does that mean? Is steel making strategic? Is anything that makes a big profit caught by economic benefit? Lots of ways to interpret those rules. The governemnt are creating a fog to scare off anyone doing business in Russia.

(4) For the purposes of this regulation, being “involved in obtaining a benefit from or supporting the Government of Russia” means—

(a)carrying on business as a Government of Russia-affiliated entity;
(b)carrying on business of economic significance to the Government of Russia;
(c)carrying on business in a sector of strategic significance to the Government of Russia;
(d)owning or controlling directly or indirectly (within the meaning of regulation 7), or working as a director (whether executive or non-executive), trustee, or equivalent, of—
(i)a Government of Russia-affiliated entity;
(ii)a person, other than an individual, which falls within sub-paragraph (b) or (c).

Space - see rules from 2019 already re russia and Ukraine. "Person" includes companies and their directors for these purposes

Making available or acquiring military goods and military technology
25.—(1) A person must not—

(a)directly or indirectly make military goods or military technology available to a person connected with Russia;
(b)directly or indirectly make military goods or military technology available for use in Russia;

Enabling or facilitating military activities
30.—(1) A person must not directly or indirectly provide—

(a)technical assistance,
(b)armed personnel,
(c)financial services or funds, or
(d)brokering services in relation to an arrangement whose object or effect is to provide, in a non-UK country, anything mentioned in sub-paragraphs (a) to (c),
where such provision enables or facilitates the conduct of military activities carried on or proposed to be carried on by the Russian military or any other military end-user who is a person connected with Russia.

You are absolutely on point. I would imagine almost all pension funds have an element of FTSE100 investment. However, at this moment in time all the MPs are baying for Russian blood. They are like a pack of rabid dogs. They are not interested in anything else, like running an economy effectively.

On the upside, all the while Evraz is not sanctioned, it is quietly trading away and hopefully making good money. When the rabid dogs move onto something else, then sensible discussions can start. It wont take long. I mean, they were yapping and frothing at the mouth over Partygate only a couple of weeks ago, and now they dont care.