The Board of Directors of PJSC MMC Norilsk Nickel has approved the sale of an up to 39.32% stake in the Bystrinskiy Project to CIS Natural Resources Fund, a Russia-focused natural resources fund established by Interros Group and ESN Group, on the terms defined below.
As a basis for this transaction, the project is being valued at $730 million on a 100% equity basis that corresponds to the valuation used for the acquisition of a 10.67% stake in the project by a group of Chinese investors Highland Fund in June 2016. The valuation of the project in the transaction will be adjusted to $750 million if Highland Fund makes an additional payment of $20 million in exchange for an issue of 2.66% new shares of the project pursuant to previously signed agreements.
Following the closing of the transaction the company will retain a stake of above 50% and remain the operator of the project.
The transaction will be subject to a right of first refusal by Highland Fund, as well as certain other pre-conditions and necessary regulatory approvals. The transaction is expected to close by the end of 2017.
Having received an unsolicited offer from the consortium with respect to the transaction, the Audit Committee of the company’s Board of Directors, which includes two independent directors, thoroughly considered all relevant matters relating to the Transaction, including the fairness opinion referenced below and recommended to the Board of Directors to approve it. In relation to the offer, J.P. Morgan Limited has provided an opinion to the Board of Directors as to the fairness, from a financial point of view, to the company of the consideration to be paid in the proposed transaction. Having considered the recommendation of the Audit Committee and the opinion provided by J.P. Morgan, the Board of Directors has approved the transaction and the entry into legally binding agreements in respect of the transaction. In accordance with the requirements of the company’s Code of Conduct and Ethics for the Members of the Board of Directors, the Corporate Governance Code recommended by the Bank of Russia and taking into account the best corporate governance practices, members of the Board of Directors of the company and its Audit Committee who are also members of the Management Board of Interros Holding Company did not participate in consideration and approval of the transaction.
Sergey Malyshev, Senior Vice President and CFO, commented: “Divestment of an additional stake in Bystrinskiy project is fully in line with our corporate strategy of de-risking the project and “clustering” our operations outside of core production chain. We welcome a major capital commitment from large strategic investors to the project amidst volatile and challenging commodity markets”. (Nornickel/Ukrainian metal)