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July 11, 2013 5:46 pm
The largest shareholder in Eurasian Natural Resources Corporation will as early as Friday set in motion plans that will lead the troubled miner’s founders to complete their takeover attempt.
Kazakhmys, which holds a 26 per cent stake in ENRC, will send a circular to its own shareholders as soon as Friday, setting an early-August date for them to vote on resolutions to support the takeover of the miner.
Three Central Asian oligarchs and the government of Kazakhstan hope to take ENRC private after months in which it has been dogged by corporate governance concerns. The turmoil at ENRC has also led to the scrutiny of stock market listing rules in the UK, which have encouraged a number of foreign mining groups to seek a London listing.
The vote by Kazakhmys investors is set to be the decisive step enabling a delisting of ENRC to take place. If they approve it, the consortium seeking to delist ENRC will launch a takeover offer in the second week of August, people with knowledge of the plans said.
Kazakhmys, also listed in London, is not part of that consortium but has said its own shareholders should support the plan as the best way of separating from ENRC, whose performance has harmed Kazakhmys’s results.
The independent directors of ENRC have said they cannot recommend the offer by the oligarchs and the Kazakh government because it “materially undervalues” the group.
The proposed offer put forward last month would see ENRC shareholders receiving $2.65 and 0.23 Kazakhmys shares for each ENRC share, valuing ENRC at 234.3p per share.
In Kazakhmys’s case, a supportive vote from its independent shareholders would see it receiving almost $900m in cash and 77m of its own shares, which would be cancelled to increase its own free float of shares to 58 per cent. Kazakhmys shareholders’ approval is required because of the size of its stake in ENRC.
The company has already undertaken to accept an offer made by the consortium, subject to approval by Kazakhmys shareholders, according to the terms of the offer. It requires 75 per cent of Kazakhmys shareholders to accept it.
A meeting to vote on resolutions to approve the offer, and to waive a requirement by the largest Kazakhmys shareholders to make a mandatory offer for the company, is likely to be held on August 2, people with knowledge of the plans said. But that timing could change if the UK Listing Authority requires more time to decide whether to approve the plan.
As soon as that support is given, the only outstanding acceptance condition attached to the offer will have been met.
The consortium and Kazakhmys together own 82 per cent of the shares, enough for them to go ahead with a planned delisting of ENRC without the support of other shareholders.
Once the offer has been launched it is expected by those close to the process to take three months to complete. The offer is subject also to antitrust clearance in Russia, Ukraine, Kazakhstan, the US and the Common Market for Eastern and Southern Africa (Comesa).
Kazakhmys, ENRC and the consortium bidding for ENRC, known as Eurasian Resources, declined to comment.
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