Amendment of transshipment agreement
AMENDMENT OF TRANSSHIPMENT AGREEMENT WITH NAKHODKA TRADE SEA PORT
EVRAZ plc ("EVRAZ", the "Company" and together with its subsidiaries, the "Group") announces today that it has signed a Deed of Amendment ("Transaction") in relation to the Long-Term Transshipment Agreement ("LTA") between East Metals AG (the "EMAG"), a fully owned subsidiary of the Company and Nakhodka Trade Sea Port (the "Nakhodka Port") previously concluded as a part of the disposal of Nakhodka Port in May 2017.
In the Transaction, parties have agreed to increase rates for excess volumes of transshipped coal for future periods.
Key Commercial Highlights
The parties have determined and agreed on new higher rates going forward in the view of the increased demand for transshipment through Far East ports of Russia.
Rates for transshipment of excess volumes of coal (exceedingagreed quotas)
Up to 373,000 metric tonnes - US$16.2
Over 373,000 metric tonnes - US$18.0
The excess coal volume is subject to a cap of approximately 2.7 million tonnes. New rates are comparable with the rates set by the Nakhodka Port for the third parties. This will allow EVRAZ to transship additional volumes of coal to the Far East in line with its current demand.
Pursuant to UK Listing Authority ("UKLA") Listing Rule 11.1.4R, Nakhodka Port is classified as a related party of EVRAZ, due to its direct shareholders also being substantial shareholders in the Company. The Transaction, therefore, constitutes a smaller related party transaction as defined under UKLA Listing Rule 11.1.10R and EVRAZ has accordingly obtained a written confirmation from a sponsor that the terms of the transaction are fair and reasonable as far as shareholders of EVRAZ are concerned.
As part of the Nakhodka Port disposal to Lanebrook Limited (EVRAZ' majority shareholder at the date of the disposal) on 3 May 2017 and which was approved by the independent shareholders of the Company on 23 May 2017, EMAG, a fully owned subsidiary of the Company , entered into a LTA with the Nakhodka Port. EMAG took the obligation to ship certain volumes of coal and steel products through the Nakhodka Port for five years at fixed rates, secured by a "take-or-pay" clause. Further details of the LTA can be found in the Shareholder Circular which is available on EVRAZ's website https://www.evraz.com/en/investors/shareholders/gm/#2018
On 27 December 2018, the Board of Directors approved the first Deed of Amendment in relation to: (i) excess volume of coal and (ii) rates for such excess volumes to be added to the Tariff; these rates are subject to annual adjustment to be made by the parties though bona fide negotiations.
For further information:
London: +44 207 832 8998
Moscow: +7 495 937 6871
London: +44 207 832 8990
Moscow: +7 495 232 1370
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