BoD Meeting Results

PJSC MAGNIT - BoD Meeting Results

PR Newswire

London, September 11

Press-release

Krasnodar

September 11, 2015

PJSC “Magnit” Announces the Results of the BOD Meeting

Krasnodar, September 11, 2015: PJSC “Magnit”, Russia’s largest food retailer (the “Company”, “Issuer”; MOEX and LSE: MGNT), is pleased to announce the results of the BOD meeting.

Please be informed that on September 10, 2015 the BOD meeting was held (minutes of the BOD meeting of PJSC “Magnit” are w/o No. of September 10, 2015).

The meeting agenda:

Approval of the related party transactions.

Determination of the position of the PJSC "Magnit" representative at the exercise of the voting right on the JSC “Tander” shares owned by the Company.

The following BOD members were present: A. Arutyunyan, K. Pombukhchan, A. Shkhachemukov.

S. Galitskiy, A. Zayonts, A. Aleksandrov and A. Pshenichniy provided their written opinions on the items of the agenda of the BOD meeting of PJSC “Magnit”.

The number of the BOD members participated in the meeting, including written opinions of S. Galitskiy, A. Zayonts, A. Aleksandrov and A. Pshenichniy, amounts to not less than half of the number of the BOD members determined by the Charter of the Company.

Quorum to hold the BOD meeting with this agenda is present.

Voting Results:

Items 1.1 – 1.2.:

A. Arutyunyan – abstained from voting, S. Galitskiy – abstained from voting, A. Zayonts - “for”, A. Aleksandrov - “for”, K. Pombukhchan - “for”, A. Shkhachemukov – “for”, A. Pshenichniy – “for”.

The decisions were made.

Items 2.1 – 2.2.:

A. Arutyunyan – “for”, S. Galitskiy – “for”, A. Zayonts - “for”, A. Aleksandrov - “for”, K. Pombukhchan - “for”, A. Shkhachemukov – “for”, A. Pshenichniy – “for”.

The decisions were made.

Content of the decisions:

Item 1.1 on the agenda:

“To approve the loan agreement (several associated loan agreements) which the Company plans to execute in future with LLC “Selta” and which is the related party transaction with the following essentials:

1. parties of the transaction (transactions): the lender – PJSC “Magnit”, the borrower – LLC “Selta” (Taxpayer Identification Number 2310053662, location: 15/5 Solnechnaya street, Krasnodar, Krasnodar krai);

2. subject of the transaction (transactions): loan of funds;

3. maximum price (amount) of the transaction (transactions): not more than 477,000,000 (Four hundred and seventy seven million) rubles;

4. loan interest rate (per annum): not more than 180 (One hundred and eighty) percent of the key interest rate of the Bank of Russia (published on the official website of the Bank of Russia on the Internet (www.cbr.ru)) as of the loan issue date;

5. time limit for the fulfillment of obligations under the transaction (transactions): up to 3 (Three) years from the time of its execution (the time of repayment of the loan amount and interest).

The price of the property to the possible disposal of which the transaction is related amounts to less than 2% of the book value of assets of the Company determined on the basis of the accounting statements for the latest accounting period”.

Hereby to provide the Chief Executive Officer of PJSC “Magnit” or other PJSC “Magnit” representatives, authorized by the CEO, with the right to sign the additional agreements to the loan agreement (several associated loan agreements), which change the terms and conditions of the loan agreement, including but not limited to the change of the interest rates, the loan amount and the term of the loan provision within the limits hereof”.

Item 1.2 on the agenda:

“To approve the guarantee agreement (several associated guarantee agreements) which is the related party transaction and which the Company (hereinafter – the Guarantor) plans to execute in future as the security for obligations of Joint-stock company “Tander” (beneficiary) (hereinafter – the Borrower) to VTB Bank (Public joint-stock company) (hereinafter – the Creditor) under the agreement on the opening of revolving and (or) non-revolving credit line (hereinafter – the Credit agreement), which the Borrower plans to execute in future, with the following essentials:

1. The Credit Agreement shall regulate the general conditions and the procedure for Credits issue, rights and liabilities of the parties, settlement procedures, as well as liability of the parties for non-fulfillment or improper fulfillment of their obligations.

2. The maximum amount of indebtedness of the Borrower under the Principal debt (issued and outstanding amount of Credit/Credits, including the amounts not paid out within the term set by the Credit Agreement, which the Borrower may have at any date during the validity of the Credit agreement) amounts to not more than 10,000,000,000 (Ten billion) rubles.

3. The total Credit term amounts to not more than 5 (Five) years from the effective date of the Credit agreement.

4. The Borrower shall repay (return) the Credits in not later than 3 (Three) years from the issue date of each Credit.

5. The Credit interest rate can be fixed of floating:

5.1. Floating credit interest rate shall be calculated by the Creditor as the key rate of the Bank of Russia (the key rate published on the official website of the Bank of Russia (www.cbr.ru) increased by the margin in per cent per annum, stipulated in the credit application form of the Borrower and approved by the Creditor. Credit interest rate shall be determined by the Bank on the credit issue date based on the key rate valid on the credit issue date. Revision and roll-over of the floating rate for the next interest period shall be effected by the Bank on a unilateral basis every day from the Credit issue date.

5.2. The Creditor may increase the interest rate on a unilateral basis on credits with the fixed interest rate in accordance with the terms and conditions of the Credit agreement.

5.3. The Credit line interest shall be increased by 1% (One) per cent per annum if the monthly credit turnover (for each calendar month) of the settlement account and settlement accounts of the Borrower held in the Bank in the foreign currency, determined starting from the first date of the month following the month of the Credit issue and to the date of the final debt repayment under the Credit agreement, is less than threshold set by the Credit agreement, from the average amount of indebtedness of the Borrower under the principal debt to the Banks of the Group for the preceding month.

6. The Credit agreement may stipulate the following liability of the Borrower for non-fulfillment or improper fulfillment of obligations under the Credit agreement:

6.1. In the event of delayed repayment of indebtedness under the Principal debt the Borrower shall pay the Creditor the penalty (fee) in the amount of 1/365(366) of the fixed Credit interest rate or floating Credit interest rate of the outstanding amount of indebtedness under the Principal debt for each day of delay irrespective of the Credit line interest payment.

6.2. In the event of delayed repayment of indebtedness under the interest/Commission, the Borrower shall pay the Creditor the penalty (fee) in the amount of 2/365(366) of the fixed Credit interest rate or floating Credit interest rate of the outstanding amount of indebtedness under the Credit interest and/or commission for each day of delay.

6.3. In the event of nonfulfillment or improper fulfillment of the Borrower’s obligation to file with the Bank the certificate on the debt portfolio of the Group or consolidated financial statements of the Group prepared in accordance with the IFRS for the calendar year, the Borrower shall pay the Creditor the penalty (fee) in the amount of 0.01% of the Principal debt amount, but not less than 500,000 (Five hundred thousand) rubles.

6.4. In the event of nonfulfillment or improper fulfillment of the Borrower’s obligation to secure the monthly credit turnover of the settlement accounts in the Bank under the terms of the Credit agreement, the Borrower shall pay the penalty in the amount of 1% per annum of the outstanding liabilities to secure credit turnover of the settlement accounts of the Borrower, held in the Bank.

7. Terms, procedure of issue and repayment of the Credit amount, interest and other payments shall be determined by the relevant Credit agreements.

8. The marginal price (amount) of the guarantee agreement (several associated guarantee agreements: the total amount of the Guarantor’s obligations shall not exceed 500,000,000 (Five hundred million) rubles.

The price (money value) of the Company’s property, which can be directly or indirectly disposed by the Company under the guarantee agreement (several associated guarantee agreements), amounts to less than 2% of the book value of the Company’s assets, determined by its accounting (financial) statements as of the last reporting date.

Hereby to provide the Chief Executive Officer of PJSC “Magnit” or other PJSC “Magnit” representatives, authorized by the CEO, with the right to sign the additional agreements on the changes to the terms of the guarantee agreement (several associated guarantee agreements) due to the change of the terms and conditions of the Credit agreements, including but not limited to the change of the interest rates, the credit amount and the term of the credit issue within the limits hereof”.

Item 2.1 on the agenda:

“To recommend the sole executive body of PJSC "Magnit", which is the sole shareholder of JSC “Tander”, to make the following decisions at the exercise of the voting right on the JSC “Tander” shares owned by the Company:

“To pay dividends on ordinary registered shares of JSC “Tander” following the results of the six months of 2015 reporting year in the amount of 18,000,000,000 (Eighteen billion) rubles, which amounts to 1.8 rubles per one ordinary share. To determine the following record date: September 21, 2015. To pay dividends in monetary funds in accordance with the procedure and within the time limit established by the legislation of the Russian Federation.

Item 2.2 on the agenda:

“To recommend the sole executive body of PJSC “Magnit”, which is the sole shareholder of JSC “Tander”, to make the following decision at the realization of the voting right on shares owned by the Company”:

“Under the clause 14.2 of the Charter of JSC “Tander” to approve the conclusion of the General agreement on the opening of the revolving framework facility with the tiered interest rates (hereinafter – the Credit agreement) by JSC “Tander” (hereinafter – the Borrower) which the Borrower plans to execute in future with Public Joint Stock Company “Sberbank of Russia” (hereinafter – the Creditor), related to acquisition, disposal and the company’s potential direct or indirect disposal of property, the cost of which amounts to 5 and more percent of the balance sheet value of assets of the company, its subsidiaries, principal company (of which the company is a subsidiary), as well as other subsidiaries of the principal company (“the Group”), determined on the basis of the latest available IFRS consolidated report of the Group with the following essentials:

1. The Creditor shall provide the Borrower with monetary funds in Russian rubles;

2. Total credit limit under the Credit agreement, which the Borrower plans to execute in future, shall not exceed 20,000,000,000 (Twenty billion) rubles;

3. The term of credit use under each Credit agreement shall not exceed 5 (Five) years;

4. Interest rate for the credit use including charges shall not exceed 25 (Twenty five) percent per annum;

5. Terms, procedure of granting and repayment of the credit amounts, interest and other payments shall be determined by the Credit agreement.

Hereby to provide Chief executive officer of JSC “Tander” or other JSC “Tander” representatives, authorized by the CEO, with the right to sign the additional agreements changing the terms and conditions of the Credit agreement, including but not limited to the change of the interest rates, the credit amount and the term of the credit provision within the meaning hereof”.

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Company description:

Magnit is Russia's largest food retailer. Founded in 1994, the company is headquartered in the southern Russian city of Krasnodar. As of June 30, 2015, Magnit operated 29 distribution centers and over 10,700 stores (8,890 convenience, 311 hypermarkets, and 1,527 drogerie stores) in approximately 2,233 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the reviewed IFRS consolidated financial statements for 1H 2015. Magnit had revenues of RUB 455 billion and an EBITDA of RUB 49 billion. Magnit's local shares are traded on the Moscow Stock Exchange (MOEX: MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has a credit rating from Standard & Poor's of BB+. Measured by market capitalization, Magnit is one of the largest retailers in Europe.