Linklaters is advising EVRAZ plc, a leading global producer of steel, iron ore and vanadium, on the proposed demerger of its metallurgical coal business.
The coal business is consolidated under PJSC Raspadskaya (RASP), the largest coking coal producer in Russia and one of the leading coking coal producers globally.
The demerger is to be effected by EVRAZ making an interim in specie distribution of the shares it directly holds in RASP (being approximately 90.9% of the total ordinary shares in RASP), which is already listed on the Moscow Exchange, to EVRAZ shareholders. In order to generate sufficient distributable reserves to effect the demerger, EVRAZ proposes to capitalise the sum of US$8.2 billion currently standing to the credit of its profit and loss reserve by way of issuing bonus shares, and then to subsequently reduce its share capital by cancelling such bonus shares. The demerger is a Class 1 transaction under the UK Listing Rules and is subject to approval by EVRAZ Shareholders, as well as being contingent on the capital reduction becoming effective.
The demerger will result in the creation of two distinct publicly listed businesses with leading positions in their respective fields. EVRAZ and RASP will operate as separate, independent companies following the demerger. To aid the transition certain trading arrangements, including two new, long-term coal offtake agreements (pursuant to which RASP will provide EVRAZ with up to approximately 60% of the EVRAZ’s coal requirements for the purposes of steel production post-demerger), will continue until 31 December 2026.
The Linklaters team was led by Hugo Stolkin, UK Corporate Partner, and Thomas Bishop, UK Corporate Associate, with Rachel Barrett, UK ESG Partner, advising on ESG matters.
Commenting on the proposed demerger, Hugo Stolkin said:
“It has been a pleasure advising EVRAZ throughout their journey to launching this proposed demerger, an important strategic move allowing each business to concentrate on its respective strategic and sustainability objectives.
“EVRAZ is the latest transaction of this type Linklaters has advised on, after advising Anglo American on the demerger of its thermal coal operations. As companies continue to grapple with their ESG credentials and business planning we can expect to see more demergers and carve-outs in the year to come.”
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