PLZL.L Regulatory News (PLZL)

22 Jan 2009 09:04



FOR IMMEDIATE RELEASE

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY OTHER RESTRICTED JURISDICTION

22 January 2009

OJSC POLYUS GOLD

STATEMENT RE: PARTIAL OFFER PRE-CONDITION

OJSC Polyus Gold ("Polyus Gold") wishes to clarify the pre-condition in relation to the US$200 million Senior Notes due 2013 (the "Senior Notes") issued by KazakhGold Group Limited ("KazakhGold"), as set out in the announcement of the proposed partial offer to be made by Jenington International Inc ("Jenington"), an indirect wholly-owned subsidiary of Polyus Gold, to acquire 50.1 per cent. of the issued and to be issued share capital of KazakhGold (the "Proposed Partial Offer"), made on 29 December 2008.

The making by Jenington of an announcement of the Proposed Partial Offer in accordance with Rule 2.5 of the Takeover Code is subject to, amongst other things, the receipt of a waiver, on terms that are acceptable to Polyus Gold, from the holders of the Senior Notes ("Noteholders") in respect of their right to require KazakhGold to repurchase all or any part of the Senior Notes on a change of control of KazakhGold, and which would enable KazakhGold to raise additional debt from Polyus Gold or members of the Polyus Gold group (the "Waiver").

This pre-condition is not waivable by Jenington and, accordingly, if the Waiver is not granted by Noteholders, the Proposed Partial Offer will not be made.  The proposal made by KazakhGold to Noteholders is that (i) Polyus Gold will become a limited liability guarantor of the Senior Notes (subject to necessary corporate approval to be obtained by Polyus Gold), (ii) Polyus Gold or any of its subsidiaries may provide a credit facility of up to US$50 million to KazakhGold following completion of the Proposed Partial Offer and (iii) KazakhGold will pay a consent fee of US$50.00 for each US$1,000 in principal amount of the Senior Notes held by Noteholders who vote in favour of the extraordinary resolution at the meeting of Noteholders, to be held on 2 February 2009.

Polyus Gold considers that the proposal made by KazakhGold to Noteholders is attractive in view of:

- the downgrade by Fitch Ratings on 19 January 2009 of KazakhGold's Long-term Issuer Default Rating (IDR) to 'CCC' from 'B' and the downgrade of KazakhGold's senior unsecured rating to 'CCC'/'RR4' from 'B'/'RR4'. Both ratings remain on Rating Watch Negative;

- the benefit to Noteholders of having Polyus Gold, which had no debt as at 30 June 2008, as an additional guarantor of the Senior Notes; and

- the statement by KazakhGold, which was included in the announcement of the Proposed Partial Offer on 29 December 2008, that, "With the inability to raise capital in the current difficult market conditions and due to the fact that production has been significantly lower than anticipated, there has been a severe deterioration in KazakhGold's cash balance over the second half of 2008 and, consequently, KazakhGold will require a funding commitment during the first quarter of 2009, otherwise it will not be able to operate as a going concern in its current form."

A further announcement regarding the Proposed Partial Offer will be made in due course.

Requests for information in relation to the consent solicitation process and the proposal to Noteholders should be directed to HSBC, which is acting as sole Solicitation Agent for KazakhGold, by telephone at +44 20 7991 5880 (London) / +1 212 525 5552 (New York) or via email at kazakhgold-consent@hsbcib.com. Copies of the Consent Solicitation Statement can be obtained either from HSBC or from Lucid Issuer Services Limited ("Lucid"), which is acting as Tabulation Agent.

Enquiries:

HSBC Bank plc (financial adviser to Polyus Gold)

HSBC Bank plc ("HSBC"), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Polyus Gold and Jenington and no one else in connection with the Proposed Partial Offer and will not be responsible to anyone other than Polyus Gold and Jenington for providing the protections afforded to clients of HSBC, nor for providing advice in relation to the Proposed Partial Offer, the contents of this announcement or any other matter referred to herein.

General

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. This announcement has been prepared for the purposes of complying with English law and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of England.

This announcement is not intended to, and does not constitute, or form part of, an offer to sell or an invitation to purchase or subscribe for any securities or a solicitation of any vote or approval in any jurisdiction.

The Polyus Gold Shares have not been, and will not be, registered under the United States Securities Act of 1933 (as amended) or under any relevant securities laws of any state or district of the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Polyus Gold does not plan to make a public offering of securities in the United States.

The Proposed Partial Offer, if it is made, will not be made, directly or indirectly, in or into the United States, Canada, Australia, Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of such jurisdiction. Accordingly, copies of this announcement are not being, and must not be, mailed or otherwise distributed or sent in or into or from the United States, Canada, Australia, Japan or any other such jurisdiction.

Neither this announcement nor any information contained herein is an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities in Russia, and does not constitute an advertisement of the securities in Russia. KazakhGold shares and KazakhGold GDRs to which this communication relates have not been and will not be registered in Russia and are not intended for "placement" or "public circulation" in Russia. Polyus Gold ordinary shares to which this communication relates have not been and will not be registered outside Russia and are not intended for "placement" or "public circulation" outside Russia as each term defined under Russian securities laws.

Forward Looking Statements

This announcement, including information included or incorporated by reference in this announcement, may contain "forwardߛlooking statements" concerning Jenington, Polyus Gold or KazakhGold. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forwardߛlooking statements. The forwardߛlooking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested by them. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement. Each of Jenington, Polyus Gold and KazakhGold assumes no obligation and does not intend to update these forwardߛlooking statements, except as required pursuant to applicable law.