Polymetal to change registration

Polymetal has decided to follow its competitors – Daltsvetmet and Polyus Gold – in changing its registration from Russia to overseas. The company has announced of the start of the RTO deal. Its new shareholder will be Polymetal International registered in Jersey – it plans to hold an IPO in London for $500 mln. On the background of the rising price for gold the interest of investors in a new company should be high but the problem might be the non-execution by Polymetal of its production plans.
On Friday PMTL Holding from Cyprus made an offer to the shareholders of Polymetal for the purchase of the shares belonging to them  and the depository receipts. PMTL Holding 100% belongs to the registered in Jersey Polymetal International, that after the completion of the deal will become the head structure of Polymetal and will have a direct listing on the LSE.
The deal will be held in 3 stages. First the shareholders of Polymetal will be offered to exchange their shares for the papers of Polymetal International in the proportion 1:1 (the shares of the Russian company will stay at PMTL Holding). Then the monetary purchase of the stakes of shareholders, who don’t agree on the exchange, is presupposed. Finally, when the Jersey company will become the owner of 95% of Polymetal, the rest of the shareholders of the company will be made a compulsory offer. 
Between the first and second stages Polymetal International plans to hold an IPO on LSE for about $500 mln (the application for listing has already been approved). According to a source of Kommersant familiar with the details of the deal, the offering will be done on the account of new shares. After the obtaining of the premium listing the free float of Polymetal International will become not less than 50% taking into account 37.5% of Polymetal that are already in free circulation. It will allow the company to join the most significant European index,the  FTSE 100. The exact volume of offering on LSE will depend on the number of minority shareholders who agree on the exchange, the interlocutor added.
The change of the registration place aims at raising the liquidity of Polymetal. To start the deal, it should be approved by not less than 85% of Polymetal’s shareholders (now only 51.1% have agreed). The irrevocable obligations for the exchange have already been signed with the major shareholders of the company, that in total hold 53.9%. Today 2 teams of managers of Polymetal will start the road show for the Russian and European minority shareholders. Its first stage will be over on October 21st, the start of trades on LSE is planned for the first week of November. The completion of the deal is expected at the beginning of the spring 2012.
Polymetal will become the 3rd Russian company that has changed its registration an RTO. Daltsvetmet of M. Finsky was the first to do it in December 2010 (the company was taken over by the British White Tiger Gold), this summer Polyus Gold was taken over by the affiliate KazakhGold. Polymetal planned the deal a year ago. Jersey was chosen as a place of registration as tax risks for companies with foreign assets are lower there, a source of Kommersant explained. Moreover, the rate of the corporate tax in Great Britain is 28%, in Jersey – 0%.
Polymetal has chosen a good time to enter the international market, RMG’s A. Tretelnikov thinks. The loans crisis in Europe has cause price of gold  to rise (on Friday an ounce cost $1.6 thousand, +17% since the beginning of the year), that makes investors interested in the gold mining companies. Investors should also be interested in the promise of Polymetal to annually pay dividends to shareholders at the amount of not less than 20% of the net profit beginning from 2011 (up to the present moment the company hasn’t paid dividends). 
According to O. Petropavlovsky from BKS, not less than 95% of Polymetal’s shares will be offered for the exchange (the other 5% cost on Friday about $340 mln). The profitability from sales wont’ be high – a bit more than 4%, and the most part of Polymetal’s free float is concentrated at institutional investors who are not legally restricted from holding the papers of foreign companies. There might be some problems only with the IPO of Polymetal International, the analyst adds, as Polymetal’s operational history is not that perfect: in 2011 the company promised to produce about 1 mln ounces of gold, but then reduced the forecast by about 30%. There was a similar situation in 2007.  




http://www.kommersant.ru/doc/1786665
Translated by Galiya Musabekova