4 Sep 2017 13:33
Date: 4 September 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION TO ANY PERSON LOCATED OR RESIDENT IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT. OTHER RESTRICTIONS APPLY (SEE "OFFER AND DISTRIBUTION RESTRICTIONS" BELOW).
TENDER OFFER FOR NOTES DUE 2018 AND 2019
NLMK Group ("NLMK"), the largest steel producer in Russia and one of the most efficient steel companies in the world, notes the announcement by Steel Funding D.A.C. (the "Offeror"), a special purpose vehicle established for the purpose of issuing debt instruments for financing loans to NLMK, that it has today launched invitations to holders of the outstanding notes detailed in the table below, issued by it for the purpose of financing corresponding loans to Novolipetsk Steel (each of the series of notes referred to below, a "Series", and all outstanding notes of both Series together, the "Notes"), to tender their Notes for purchase by the Offeror for cash (each such invitation, an "Offer" and, together, the "Offers") at a purchase price equal to U.S.$1,017.50 per U.S.$1,000 in principal amount (the "2018 Notes Purchase Price") of the U.S.$800,000,000 4.45 per cent. Loan Participation Notes due 2018 (the "2018 Notes") (U.S.$396,159,000 outstanding principal amount, Regulation S: Common Code: 080863284, ISIN: XS0808632847; Rule 144A: Common Code: 078395052, ISIN: US85812PAB94, CUSIP: 85812PAB9) and U.S.$1,053.75 per U.S.$1,000 in principal amount (the "2019 Notes Purchase Price" and, together with the 2018 Notes Purchase Price, the "Purchase Price") of the U.S.$500,000,000 4.95 per cent. Loan Participation Notes due 2019 (the "2019 Notes") (U.S.$211,109,000 outstanding principal amount, Regulation S: Common Code: 078393432, ISIN: XS0783934325; Rule 144A: Common Code: 061917110, ISIN: US85812PAA12, CUSIP: 85812PAA1).
The Offeror proposes to purchase any and all of the Notes that are validly tendered in the Offers and accepted for purchase by the Offeror, although the Offeror (acting jointly with NLMK) reserves the right, in its sole and absolute discretion, to extend, re-open, withdraw or terminate any Offer and to amend or waive any of the terms and conditions of any Offer, including any increase in the Purchase Price for any Series, at any time after the announcement of the Offers.
The Offeror will also pay accrued and unpaid interest in respect of all Notes validly tendered and accepted for purchase by the Offeror, from (and including) the interest payment date for the relevant Series immediately preceding the Settlement Date to (but excluding) the Settlement Date (such payment, "Accrued Interest").
Description of the Notes | Common code/ISIN for Regulation S Notes | Common code/ISIN/CUSIP for Rule 144A Notes | Outstanding principal amount | Minimum Denomination | Purchase Price | Amount subject to the Offers |
U.S.$800,000,000 4.45 per cent. Loan Participation Notes due 2018 (the "2018 Notes") | 080863284/ XS0808632847 | 078395052/ US85812PAB94/ 85812PAB9 | U.S.$396,159,000 | U.S.$ 200,000 | U.S.$1,017.50 per U.S.$1,000 in principal amount of 2018 Notes | Any and all |
U.S.$500,000,000 4.95 per cent. Loan Participation Notes due 2019 (the "2019 Notes") | 078393432/ XS0783934325 | 061917110/ US85812PAA12/ 85812PAA1 | U.S.$211,109,000 | U.S.$ 200,000 | U.S.$1,053.75 per U.S.$1,000 in principal amount of 2019 Notes | Any and all |
Capitalised terms used in this announcement but not otherwise defined have the meanings given to them in the tender offer memorandum dated 4 September 2017 ("Tender Offer Memorandum") issued by the Offeror.
The Offers to purchase the outstanding Notes are subject to the terms and conditions contained in the Tender Offer Memorandum. The Offeror is not under any obligation to accept for purchase any Notes tendered pursuant to the Offers. The acceptance for purchase by the Offeror of Notes tendered pursuant to the Offers is at the sole discretion of the Offeror and tenders may be rejected by the Offeror for any reason.
The Offers will be funded with the proceeds of the issuance of new series of loan participation notes (the "New Notes") offered by the Offeror (the "Financing Condition"). Accordingly, the Offers are subject to the satisfaction of the Financing Condition and certain other Transaction Conditions at or prior to the Settlement Date, as described in Tender Offer Memorandum.
Introduction to and Rationale for the Offers
On the terms and subject to the conditions contained in the Tender Offer Memorandum, the Offeror invites Noteholders (subject to the Offer and Distribution Restrictions contained herein) to tender their Notes for purchase by the Offeror at the relevant Purchase Price together with Accrued Interest.
The purpose of the Offers is to enable the Offeror to acquire, subject to the satisfaction of the Financing Condition and other Transaction Conditions, all of the outstanding Notes that are validly tendered in the Offers. Together with the contemplated issuance of the New Notes, this would have the effect of extending the maturity profile of a portion of NLMK's indebtedness.
The Offeror has entered into an agreement with NLMK under which NLMK will procure the purchase of the Notes that are validly tendered in the Offers and accepted for purchase by the Offeror. The purchases of such Notes by the Offeror will be financed with funds it receives from NLMK (which will in turn obtain all or part of such funds from the net proceeds of the issuance of the New Notes) pursuant to such agreement, and all such purchased Notes will be cancelled and a corresponding portion of the principal amount of the relevant loan to NLMK (together with accrued interest) will be deemed repaid.
Details of the Offers
The Offeror will pay, on the Settlement Date, the relevant Purchase Price for the relevant Notes accepted by it for purchase pursuant to the Offers.
Without limitation to the Offeror's right to reject any tender of Notes under the Offers for any reason, the Offeror proposes, subject to the Financing Condition and other Transaction Conditions, to accept any and all validly tendered Notes for purchase. If the Offeror (acting jointly with NLMK) decides in its sole discretion to accept valid tenders of any Notes for purchase to any Offer, it will accept for purchase all of the Notes so validly tendered, without scaling.
The Offeror will also pay, on the Settlement Date, an Accrued Interest in respect of the Notes accepted for purchase pursuant to the Offers.
The Offers are being made in connection with a concurrent offering of the New Notes. The net proceeds from the offering of the New Notes will be used by NLMK, among other things, to finance the purchase of the Notes pursuant to the Offers. Each Offer is not an offer to sell or a solicitation of an offer to buy the New Notes. Noteholders who wish to tender their Notes for cash and also subscribe for the New Notes should quote in their Tender Instructions an allocation identifier code ("Allocation Identifier Code"), which can be obtained by contacting the Joint Dealer Managers before the Expiration Deadline. The receipt of an Allocation Identifier Code in conjunction with any tender of Notes in the Offers is not an allocation of the New Notes. In order to apply for the purchase of the New Notes from the Offeror, such Noteholder must make a separate application in respect of the New Notes for the purchase of such New Notes. The Offeror (acting jointly with NLMK) will review the Tender Instructions and may give priority to those Noteholders tendering with Allocation Identifier Codes in connection with the allocation of New Notes. However, no assurances can be given that any Noteholder that tenders Notes will be given an allocation of New Notes at the levels it may subscribe for, or at all. The use of any Allocation Identifier Code and purchases of New Notes are subject to all applicable securities laws and regulations in force in any relevant jurisdiction.
Allocation of the New Notes
The Offeror will, in connection with allocations of the New Notes, consider among other factors whether or not the relevant Noteholder seeking an allocation of the New Notes has validly tendered or indicated a firm intention to tender the Notes pursuant to the Offers, and if so the aggregate principal amount of the Notes tendered or intended to be tendered by such Noteholder. When considering allocations of the New Notes, the Offeror intends to look favourably upon those Noteholders who have, prior to the allocation of the New Notes, tendered the Notes. However, the Offeror is not obliged to allocate the New Notes to a Noteholder which has validly tendered the Notes pursuant to the Offers. Any allocations of the New Notes, while being considered by the Offeror as set out above, will be made in accordance with customary new issue allocation processes and procedures. In order to apply for the purchase of the New Notes, such Noteholder must make a separate application to any of the joint lead managers for the New Notes for the purchase of such New Notes.
Indicative Timetable for the Offers
The expected timetable of events will be as follows:
Date and Time | Action |
4 September 2017 | Commencement of the Offers Offers announced by way of announcements on the relevant Notifying News Service(s), through the Clearing Systems and via the website of the Irish Stock Exchange. Tender Offer Memorandum available from the Offer Website run by the Information and Tender Agent: http://sites.dfkingltd.com/nlmk. |
13 September 2017 at 16:00 hours London time | Expiration Deadline Deadline for receipt by the Information and Tender Agent of all valid Tender Instructions in order for Noteholders to be able to participate in the Offers. |
On or about 14 September 2017 | Announcement of Acceptance and Results As soon as practicable following the Expiration Deadline, the Offeror will announce whether the Financing Condition and the other Transaction Conditions are expected to be satisfied and, if so, the announcement by the Offeror of: (i) in respect of the 2018 Notes, whether the Offeror will accept valid tenders of the 2018 Notes pursuant to the applicable Offer and, if so accepted, the 2018 Notes Acceptance Amount; (ii) in respect of the 2019 Notes, whether the Offeror will accept valid tenders of the 2019 Notes pursuant to the applicable Offer and, if so accepted, the 2019 Notes Acceptance Amount; (iii) the aggregate principal amount of the 2018 Notes and 2019 Notes that will remain outstanding following completion of the relevant Offer; and (iv) the confirmation of the final Settlement Date for the Offers. |
On or about 26 September 2017 | Settlement Date Subject to the satisfaction (or, if applicable, the waiver) of the Financing Condition and the other Transaction Conditions, the expected Settlement Date for the Offers. |
General
The complete terms and conditions of the Offers are set forth in the Tender Offer Memorandum, which will be sent to Noteholders at their request. Noteholders are urged to read the Tender Offer Memorandum carefully.
NLMK and the Offeror have retained ING Bank N.V., London Branch, J.P. Morgan Securities plc, Société Générale and UniCredit Bank AG to act as Joint Dealer Managers for the Offers.
Operational Procedure Description
In order to participate in the Offers, Noteholders must validly tender their Notes by delivering, or arranging to have delivered on their behalf, a valid Tender Instruction that is received by the Information and Tender Agent prior to 16:00 hours, London time, on 13 September 2017. Tender Instructions must be submitted electronically in accordance with the procedures of the relevant Clearing System, and shall be irrevocable, according to the terms and conditions, contained in the Tender Offer Memorandum.
As at the close of trading operations on the Business Day immediately preceding the date of the Tender Offer Memorandum, no Rule 144A Notes (as defined in the relevant Trust Deed) were outstanding. Accordingly, the Offers are not being conducted in a manner eligible for the procedures of the Depository Trust Company. To participate in the Offers, a holder of Notes must either hold such Notes through a Direct Participant in the relevant Clearing System or arrange for the transfer of its Notes so that they are held through such Direct Participant.
If you need further information about the Offers, please contact the Joint Dealer Managers or the Information and Tender Agent.
Offer Website: http://sites.dfkingltd.com/nlmk
Contact Details:
THE OFFEROR
Steel Funding D.A.C.Pinnacle 2
Eastpoint Business Park
Dublin 3Ireland
JOINT DEALER MANAGERS
ING Bank N.V., London Branch
8-10 Moorgate
London EC2R 6DA
United Kingdom
For information by telephone:
+31 20 563 8017
Attention: Liability Management Team
Email: liability.management@uk.ing.com
J.P. Morgan Securities plc25 Bank Street
Canary Wharf
London E14 5JP
United Kingdom
For information by telephone:
+44 20 7134 2468
Attention: Liability Management
Email: em_europe_lm@jpmorgan.com
Société Générale10 Bishops Square
London E1 6EG
United Kingdom
For information by telephone:
+44 20 7676 7680
Attention: Liability Management
Email: liability.management@sgcib.com
UniCredit Bank AGArabellastrasse 12
81925 Munich
Germany
For information by telephone:
+49 89 378 13722
Attention: Liability Management
Email: corporate.lm@unicredit.de
THE INFORMATION AND TENDER AGENT
D.F. King Ltd.Email: nlmk@dfkingltd.comWebsite: http://sites.dfkingltd.com/nlmk
In London:
125 Wood StreetLondon EC2V 7ANUnited KingdomTelephone: +44 20 7920 9700
In New York:
48 Wall Street, 22nd FloorNew York, New York 10005United StatesTelephone: +1 212 269 5550
Toll-Free (US only) (800) 820-2412
In Hong Kong:
Suite 1601, 16/F, Central Tower28 Queen's Road CentralHong KongTelephone: +852 3953 7230
Enquiries:
Media contact info:
Sergey Babichenko
+7 (916) 824 6743
babichenko_sy@nlmk.com
Investor Relations contact info:
Sergey Takhiev
+7 (495) 504 0504
st@nlmk.com
NLMK Group is the largest steelmaker in Russia and one of the most efficient in the world. NLMK Group's steel products are used in various industries, from construction and machine building to the manufacturing of power-generation equipment and offshore windmills. NLMK operates production facilities in Russia, Europe and the United States. The Company's steel production capacity exceeds 17 million tonnes per year. NLMK has the most competitive cash cost among global manufacturers and one of the highest profitability levels in the industry. In the six months ended 30 June 2017, the Company generated $4.699 billion in revenue and $1.221 billion in EBITDA. As of 30 June 2017, net debt/EBITDA stood at 0.43х. The company has an investment grade credit rating from S&P and Fitch. NLMK's ordinary shares with a 16% free-float are traded on the Moscow Stock Exchange (ticker "NLMK") and its global depositary shares are traded on the London Stock Exchange (ticker "NLMK:LI"). The share capital of the Company is divided into 5,993,227,240 shares with a par value of RUR1. In 2016, NLMK Group received Steel Industry Leadership Award from S&P Global Platts, a global analytical agency. For more information on NLMK Group please visit www.nlmk.com.
OFFER AND DISTRIBUTION RESTRICTIONS
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.
United Kingdom
The communication of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offers is not being made, and such documents and/or materials have not been approved, by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to those persons in the United Kingdom falling within the definition of "investment professionals" (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Financial Promotion Order")) or persons who are within Article 43(2) of the Financial Promotion Order or any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order.
France
The Offers are not being made, directly or indirectly, to the public in France. Neither this announcement, the Tender Offer Memorandum nor any other documents or materials relating to the Offers have been or shall be distributed to the public in France and only (i) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d'investissement de gestion de portefeuille pour compte de tiers) and/or (ii) qualified investors (investisseurs qualifiés) other than individuals, in each case acting on their own account and all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 of the French Code Monétaire et Financier, are eligible to participate in the Offers. This announcement, the Tender Offer Memorandum and any other document or material relating to the Offers have not been and will not be submitted for clearance to nor approved by the Autorité des Marchés Financiers.
Ireland
No action shall be taken in Ireland with respect to the Notes otherwise than in conformity with:
(a) the provisions of the European Communities (Markets in Financial Instruments) Regulations 2007 (Nos. 1 to 3) (as amended, the "MiFID Regulations"), including, without limitation, Regulations 7 (Authorisation) and 152 (Restrictions on advertising) thereof, any codes of conduct made under the MiFID Regulations, and the provisions of the Investor Compensation Act 1998 (as amended);
(b) the provisions of the Companies Act 2014 (as amended, the "Companies Act"), the Central Bank Acts 1942-2015 (as amended) and any codes of practice made under Section 117(1) of the Central Bank Act 1989; and
(c) the Market Abuse Regulation (EU 596/2014) and any rules and guidance issued by the Central Bank of Ireland under Section 1370 of the Companies Act.
Italy
None of the Offers, this announcement, the Tender Offer Memorandum or any other documents or materials relating to the Tender Offer have been or will be submitted to the clearance procedure of the Commissione Nazionale per le Società e la Borsa ("CONSOB") pursuant to Italian laws and regulations.
The Offers are being carried out in Italy as exempted offers pursuant to Article 101-bis, paragraph 3-bis of the Legislative Decree No. 58 of 24 February 1998, as amended (the "Financial Services Act") and Article 35-bis, paragraph 4 of CONSOB Regulation No. 11971 of 14 May 1999, as amended.
Noteholders, can tender some or all of their Notes pursuant to the Offers through authorised persons (such as investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190 of 29 October 2007, as amended from time to time, and Legislative Decree No. 385 of 1 September 1993, as amended) and in compliance with applicable laws and regulations or with requirements imposed by CONSOB or any other Italian authority.
Each intermediary must comply with the applicable laws and regulations concerning information duties vis-à-vis its clients in connection with the Notes or the Offer.
Russia
This announcement, the Tender Offer Memorandum or any other document or material relating to the Offers is not an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities in Russia to or for the benefit of any Russian person or entity, and does not constitute an advertisement or offering of any securities in Russia within the meaning of Russian securities laws. Information contained in this announcement, the Tender Offer Memorandum or any other document or material relating to the Offers is not intended for any persons in Russia who are not "qualified investors" within the meaning of Article 51.2 of the Federal Law no. 39-FZ "On the Securities Market" dated 22 April 1996, as amended ("Russian QIs") and must not be distributed or circulated into Russia or made available in Russia to any persons who are not Russian QIs, unless and to the extent they are otherwise permitted to access such information under Russian law.
Switzerland
The Offers do not constitute a public offering of securities pursuant to Article 652a or Article 1156 of the Swiss Federal Code of Obligations. The information presented in this document does not necessarily comply with the information standards set out in the SIX Swiss Exchange listing rules.
General
Neither this announcement, the Tender Offer Memorandum nor the electronic transmission thereof constitutes an offer to buy or the solicitation of an offer to sell Notes (and tenders of Notes for purchase pursuant to the Offers will not be accepted from Noteholders) in any circumstances in which such offer or solicitation is unlawful. In those jurisdictions where the securities, blue sky or other laws require an Offer to be made by a licensed broker or dealer and any of the Joint Dealer Managers or any of their affiliates is such a licensed broker or dealer in any such jurisdiction, such Offer shall be deemed to be made by the Joint Dealer Managers or such affiliate, as the case may be, on behalf of the Offeror in such jurisdiction.
This announcement is not an offer for sale of securities in the United States. The New Notes have not been and will not be registered under the U.S. Securities Act of 1933 (the "Securities Act"), as amended, and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offering of the securities in the United States.