Cerillion Regulatory News (CER)

28 Sep 2007 11:41

OAO Severstal28 September 2007 SEVERSTAL 28 September SEVERSTAL RESURS, THROUGH ITS AFFILIATE CENTROFERVE LIMITED, ANNOUNCES AN ALL CASH TAKEOVER OFFER FOR ALL OF THE ISSUED AND TO BE ISSUED SHARE CAPITAL OF CELTIC RESOURCES HOLDINGS PLC AT 270 PENCE PER SHARE ("OFFER") • 270 pence per share cash Offer represents a 43.6% premium to Celtic's volume weighted average share price for the three months to 17 September 20071 • The Severstal Group currently holds 29.7% of Celtic's issued share capital, including 3.1% acquired from DWS Investments today and has further secured a letter of intent to support its offer from Barrick Gold Corporation for its 6.6% shareholding in Celtic • The Offer values Celtic's issued and to be issued share capital at approximately £161 million and provides shareholders with an opportunity to realise significant value, in cash, at a substantial premium to Celtic's pre-announcement share price • Acquisition enhances growth platform for Severstal Resurs' recently created gold segment CJSC "Severstal Resurs" ("Severstal Resurs") today announces an all cash offerby its affiliate Centroferve Limited ("Centroferve") to acquire all of theissued and to be issued share capital of Celtic Resources Holdings plc("Celtic", LSE: "CER") at a price of 270 pence per Celtic share at a total valueof GBP 161 million. The acquisition forms part of Severstal Resurs' strategy of targeteddiversification and will be combined with recent acquisitions of selected goldmining licenses in Russia and the CIS region to enhance the group's newlyestablished gold segment. Severstal Resurs manages all of the mining operations of its parent company, JSC"Severstal" ("Severstal"). Severstal Resurs consists of four high-quality miningcomplexes in northwest Russia and in Western Siberia producing iron ore andcoking coal and is the second largest producer of pellets and coking coal inRussia. This announcement should be read in conjunction with the full text of theannouncement of the firm intention to make an offer under Rule 2.5 of the IrishTakeover Panel Act 1997, Takeover Rules 2001 to 2006 (the "Irish TakeoverRules") issued today. The sources and bases for certain information contained inthis press release are set out below. THE OFFER Centroferve intends to make an all cash offer for all of the issued and to beissued shares in Celtic (including all shares issued as a result of the exerciseof the Celtic warrants and options, while the Offer remains open foracceptance). Subject to the terms and conditions of the Offer, acceptingshareholders will receive 270 pence per Celtic share in cash. The offer represents: • a 41.4% premium to the volume weighted average price for the one month to 17 September 2007; • a 43.6% premium to the volume weighted average price for the three months to 17 September 2007; and • a 51.7% premium to the volume weighted average price for the twelve months to 17 September 2007. The Offer will be subject to a number of customary conditions, including aminimum acceptance condition of 50.1% and regulatory approvals. For details ofthe Offer conditions please refer to the Rule 2.5 announcement issued byCentroferve on 28 September 2007 under the Irish Takeover Rules. Centroferve has secured an irrevocable undertaking from Bluecone Limited, anaffiliate of Severstal Resurs and 29.7% shareholder in Celtic, to accept theOffer. These shares were acquired on 13 August from Aton Capital and on 20September from East Guardian Opportunity Fund and on 28 September from DWSInvestments, three substantial Celtic shareholders. Centroferve has also secureda letter of intent to accept the Offer in relation to the 6.6% of Celtic sharesheld by Barrick Gold Corporation. Severstal Resurs believes that the endorsement of its Offer by several ofCeltic's largest shareholders, three of which have already sold their shares toSeverstal Resurs outright, and by Barrick Gold Corporation, the world's largestgold producer by market value, is a firm indication that the Offer providesexceptional value and represents an excellent outcome for Celtic's shareholders.Severstal Resurs also notes, in this regard, that Celtic's Chairman has divestedapproximately 149,000 shares of his stake in Celtic over the past four to fivemonths - the majority of his stake - at a volume weighted average price of £1.57per share. Severstal Resurs' Offer is 72% higher than this price. ACQUISITION RATIONALE Mr. Roman Deniskin, CEO of Severstal Resurs, said: "We believe that this offer represents an exceptionally attractive price andprovides Celtic shareholders with an opportunity to realize a substantial cashpremium - we are offering a 43.6% premium to Celtic's 3 month volume weightedaverage share price and a 51.7% premium to Celtic's 12 month volume weightedaverage share price to 17 September 2007. "Our operational, financial, technical and human resources capabilities in theCIS region enable us to leverage and utilize Celtic's assets on a long-termbasis and in a manner that Celtic as a standalone entity simply could not. "The transaction is in line with Severstal Resurs's strategy of diversificationinto other metals within the CIS. We are increasing our interests in gold, whichwe consider to have attractive long term fundamentals. We expect to build onthis acquisition and recent acquisitions of gold mining licenses to furtherexpand our gold segment. When considering potential acquisition opportunities,we focus on quality of operations and production profile, reserves andresources, cost position, technology and operational management team." REASONS FOR THE UNILATERAL OFFER On 5 September 2007 Severstal Resurs approached both the Chief Executive Officerand Chairman of Celtic with the terms of a possible cash offer. This proposalwas conditional upon the provision of certain due diligence to the reasonablesatisfaction of Severstal Resurs and the recommendation of the Celtic board ofdirectors. Severstal Resurs reserved the right to waive, in whole or in part,any of these pre-conditions at its discretion. On 18 September the Celtic board of directors rejected Severstal Resurs'proposal and declined to provide the limited due diligence requested. On 27 September Severstal Resurs again approached Celtic's Chief ExecutiveOfficer with a proposed cash offer without due diligence conditions and with aview towards securing a recommendation from the board of directors of Celtic.Celtic decided not to afford its shareholders the opportunity to consider thisOffer, and Severstal Resurs' approach was again rejected. Severstal Resurstherefore felt there to be no grounds for reaching an agreed outcome. Following Celtic's refusal to engage in meaningful dialogue on a potentialoffer, after the acquisition of the initial 22% interest, Severstal Resursreceived unsolicited approaches from several shareholders requesting that itextend the opportunity to other shareholders to exit at similar values. Thisincluded East Guardian Opportunity Fund, from which Severstal Resurs purchased afurther 4.6% of Celtic on 20 September 2007. In light of Severstal Resurs' desire to increase its ownership in Celtic beyondthe current level, and approaches from Celtic shareholders to Severstal Resursto extend its Offer to all shareholders, Severstal Resurs has therefore decidedto pursue the transaction on a unilateral basis. On 28 September 2007 Severstal Resurs acquired 3.1% of Celtic from DWSInvestments, taking its ownership stake in Celtic to 29.7%, or 36.3% includingthe letter of intent in support of the Offer from Barrick Gold. In the event that Severstal Resurs does not reach the 80% acceptance levelrequired for compulsory acquisition, the Severstal Group, as the largest singleshareholder, intends to run Celtic as a subsidiary in accordance with its ownstrategy, subject to regulatory requirements and minority shareholder rights. The cash payable to Celtic shareholders under the terms of the Offer will befunded by loan facilities to be made available to Centroferve by other membersif the Severstal Group. Morgan Stanley & Co. Limited is satisfied that the necessary financial resourcesare available to Centroferve to satisfy full acceptance of the Offer. OTHER INFORMATION Morgan Stanley & Co. Limited ("Morgan Stanley") is acting as exclusive financialadvisor and Freshfields Bruckhaus Deringer and Arthur Cox are acting as legaladvisors to the Severstal Group on the transaction. The directors of Centroferve and the directors of Severstal acceptresponsibility for the information contained in this press release save that theonly responsibility accepted by the directors of Centroferve and by thedirectors of Severstal for information relating to Celtic, which has beencompiled from published sources, has been to ensure that such information hasbeen correctly and fairly reproduced or presented (and no steps have been takenby the directors of Centroferve or the directors of Severstal to verify thisinformation). To the best of the knowledge and belief of the directors ofCentroferve and the directors of Severstal (who have taken all reasonable careto ensure that such is the case), the information contained in this pressrelease for which they accept responsibility is in accordance with the facts anddoes not omit anything likely to affect the import of such information. Morgan Stanley is acting exclusively for Centroferve and Severstal Resurs and noone else in connection with the Offer and Morgan Stanley will not regard anyother person as a client in relation to the Offer and will not be responsible toanyone other than Centroferve and Severstal Resurs for providing the protectionsafforded exclusively to its clients or for providing advice in relation to theOffer, the contents of this press release or any transaction or arrangementreferred to herein. The Offer will not be made, directly or indirectly, in or into any jurisdictionwhere it would be unlawful to do so, or by use of the mails, or by any means orinstrumentality (including, without limitation, telephonically orelectronically) of interstate or foreign commerce, or by any facility of anational securities exchange of any jurisdiction where it would be unlawful todo so, and the Offer will not be capable of acceptance by any such means,instrumentality or facility from or within any jurisdiction where it would beunlawful to do so. Accordingly, copies of this press release and all otherdocuments relating to the Offer are not being, and must not be, mailed orotherwise forwarded, distributed or sent in, into or from any jurisdiction whereit would be unlawful to do so. Persons receiving such documents (including,without limitation, nominees, trustees and custodians) should observe theserestrictions. Failure to do so may invalidate any related purported acceptanceof the Offer. Notwithstanding the foregoing restrictions, Centroferve reservesthe right to permit the Offer to be accepted if, in its sole discretion, it issatisfied that the transaction in question is exempt from or not subject to thelegislation or regulation giving rise to the restrictions in question. This press release does not constitute an offer to sell or an invitation topurchase or the solicitation of an offer to purchase or subscribe for anysecurities. Any response in relation to the Offer should be made only on thebasis of the information contained in the document to be sent to shareholdersdetailing the terms and conditions of the Offer (the "Offer Document") or anydocument by which the Offer is made. This press release, including information included or incorporated by referencein this announcement, may contain 'forward-looking statements' concerning theOffer, Celtic or its Group and the Severstal Group. Generally, the words 'will','may', 'should', 'could', 'would', 'can', 'continue', 'opportunity', 'believes','expects', 'intends', 'anticipates', 'estimates' or similar expressions identifyforward-looking statements. The forward-looking statements involve risks anduncertainties that could cause actual results to differ materially from thoseexpressed in the forward-looking statements. Many of these risks anduncertainties relate to factors that are beyond the companies' abilities tocontrol or estimate precisely, such a future market conditions and thebehaviours of other market participants, and therefore undue reliance should notbe placed on such statements. Neither Centroferve nor Severstal assumes anyobligation in respect of, nor intends to update, these forward-lookingstatements, except as required pursuant to applicable law. Any person who is a holder of one per cent. or more of the Celtic shares mayhave disclosure obligations under Rule 8.3 of the Irish Takeover Rules,effective from 18 September 2007. The Offer will be made in the United States pursuant to an exemption from the UStender offer rules provided by Rule 14d-1(c) under the US Exchange Act. Notice to US holders of Celtic shares: The Offer will be made for the securities of an Irish public limited companywhose shares are listed on the AIM market in the UK and is subject to Irish andUK disclosure requirements, which are different from those of the United States.The Offer will be made in the United States pursuant to applicable US tenderoffer rules and otherwise in accordance with the requirements of the IrishTakeover Rules. Accordingly, the Offer will be subject to disclosure and otherprocedural requirements, including with respect to withdrawal rights, offertimetable, settlement procedures and timing of payments that are different fromthose applicable under US domestic tender offer procedures and law. The receipt of cash pursuant to the Offer by a US holder of Celtic shares may bea taxable transaction for US federal income tax purposes and under applicable USstate and local, as well as foreign and other tax laws. Each holder of Celticshares is urged to consult his independent professional adviser immediatelyregarding the tax consequences of acceptance of the Offer. It may be difficult for US holders of Celtic shares to enforce their rights andany claim arising out of the US federal securities laws, since Centroferve andCeltic are located in non-US jurisdictions, and some or all of their officersand directors may be residents of non-US jurisdictions. US holders of Celticshares may not be able to sue a non-US company or its officers or directors in anon-US court for violations of the US securities laws. Further, it may bedifficult to compel a non-US company and its affiliates to subject themselves toa US court's judgement. In accordance with normal Irish and UK practice and pursuant to Rule 14e-5(b) ofthe US Exchange Act, Centroferve or its nominees, or its brokers (acting asagents), may from time to time make certain purchases of, or arrangements topurchase, Celtic shares outside the United States, other than pursuant to theOffer, before or during the period in which the Offer remains open foracceptance. These purchases may occur either in the open market at prevailingprices or in private transactions at negotiated prices. Any information aboutsuch purchases will be disclosed as required in Ireland and the UK, will bereported to a Regulatory Information Service of the UK Listing Authority andwill be available on the London Stock Exchange website,www.londonstockexchange.com. Sources and Bases of Information (i) The value of the entire issued and to be issued share capital of Celtic isbased upon 55,816,026 Celtic Shares in issue, 11,000 Celtic Shares issuable toCeltic Optionholders under Celtic Share Option Schemes, and 3,705,506 CelticShares issuable to Celtic Warrantholders under Celtic Warrants with an exerciseprice at or below the Offer Price as at close of business on the last businessdate prior to the release of the Rule 2.5 Announcement . Information relating tothe share capital of Celtic is based on figures in Celtic's annual report for2006, being the latest available annual report, and on filings registered withthe Companies Registration Office in Dublin since that report. (ii) The price of Celtic shares has in each case been sourced from the Daily Official List of the London Stock Exchange, and represents the volume weighted average price on the relevant dates. (iii) The information relating to Celtic in this press release has been extracted from Celtic's annual report for 2006 and subsequent press releases on Celtic's website (www.celticresources.com) as well as RNS releases (iv) The information relating to Severstal in this press release has been extracted from Severstal's annual report for 2006 and IPO prospectus dated 8 November 2006 (v) The information relating to Severstal's iron and coal reserves is extracted from the IMC report "Audit of Iron Ore and Coal Reserves for CJSC Severstal-Resurs" dated August 2006, prepared in accordance with JORC report standards. About Severstal Resurs and Severstal: In 2006 Severstal's Mining division produced 5.4 million tons of coalconcentrate, 2.2 million tons of coking coal, 2.1 million tons of steam coal,9.5 million tons of iron ore pellets and 4.5 million tons of iron oreconcentrate. The reserves and resources of the company were estimated to be 1.8billion tonnes of iron ore as at 1 January 2006 and 0.7 billion tonnes of coalas at 1 April 2006.Severstal Resurs also owns a number of scrap metal yards inthe Northwestern, central and Southern parts of Russia. Severstal is an international steel producer with a listing on the RussianTrading System and the London Stock Exchange. Incorporated in 1993, the companyfocuses on high value-added and unique niche products and has a successful trackrecord of acquiring and integrating high-quality assets in North America andEurope. Severstal's mining assets in Russia are securing its supplies of rawmaterials. In 2006 Severstal produced 17.6 million tonnes of steel and hadrevenues of US$12.4 bn, PBT of US$1.8 bn and EPS of US$1.27. For Further Information, please Contact: Jon Simmons, Ben BrewertonFD LondonPhone: +44 207 831 3113Email: jon.simmons@fd.com ben.brewerton@fd.com Peter BacchusManaging DirectorMorgan Stanley & Co. LimitedPhone: +44 (0) 77899 43482Email: peter.bacchus@morganstanley.com Dmitry DruzhininOAO SeverstalPhone: +7 494 540 7766Email: druzhinin@severstalgroup.com Leonid Solovyev, Anna ShumaylovaFD MoscowPhone: +7 495 795 0623Email: leonid.solovyev@fd.com anna.shumaylova@fd.com This information is provided by RNS The company news service from the London Stock Exchange