Evraz PLC (LSE:EVR) said it agreed definitive terms for the demerger of its coal assets under PJSC Raspadskaya (RASP), subject to approval by its shareholders.
The demerger will result in the creation of two distinct publicly listed businesses and will allow each to pursue tailored strategic, capital allocation and sustainability objectives, the mining company said.
Evraz said the demerger will be effected by the company making an interim in specie distribution of the shares it directly holds in RASP (around 91%), which is listed on the Moscow Exchange, to Evraz shareholders.
Evraz shareholders would be entitled to 0.4255477880 of a RASP share for each Evraz held at 6:00pm on 15 February 2022.
RASP currently provides 70% of Evraz's metallurgical coal supply requirements needed to support its operations and in order to ease the transition, two long-term coal offtake agreements will continue to 31 December 2026.
East Metals AG, the trading subsidiary of the Evraz group, will continue to re-sell coal purchased from the RASP Group for up to 15 months following the demerger.
Evraz said it does not currently have sufficient distributable reserves to make the in specie distribution of all of its RASP shares and therefore to effect the demerger. As an interim step, its board is proposing to capitalise US$8.2bn from its profit and loss reserve by way of issuing capital reduction shares and to reduce its share capital by cancelling the capital reduction shares, so as to create sufficient distributable reserves to carry out the demerger.
Commenting on the demerger, RASP chairman Alexander Frolov said: “Following this transaction, Raspadskaya will strengthen its position as the largest coking coal producer in Russia and as a leading player globally, with vast and high-quality coal reserves and resources. In addition, the demerger will allow Raspadskaya to focus on its own growth strategy and sustainable development."