26th Oct 2007 07:08
OAO Severstal26 October 2007 Company OAO Severstal TIDM SVST Not for release, publication or distribution, in whole or in part, in, into or from any Restricted Jurisdiction. Cash Offer by CENTROFERVE LIMITED a wholly owned subsidiary of SEVERSTAL for the issued and to be issued ordinary share capital of CELTIC RESOURCES HOLDINGS PLC Centroferve Limited ("Centroferve") announces that, following the announcementon 28 September 2007 of its all cash offer of £2.70 per ordinary share (the"Offer") for the entire issued and to be issued ordinary share capital of CelticResources Holdings plc ("Celtic"), it has today posted an Offer Documentformally making the Offer to the shareholders of Celtic (the "Offer Document"). The following is the text of the letter (the "Shareholder Letter") that has beensent to holders of ordinary shares of EUR0.25 each in Celtic ("Celtic Shares")today together with the Offer Document and the form of acceptance relating tothe Offer (the "Form of Acceptance"). 26 October 2007 Dear Celtic Shareholder, On behalf of the Severstal Group, one of Russia's leading steel and miningconcerns, I am pleased to provide you with the enclosed Offer Document detailingthe cash Offer by Centroferve Limited, a wholly owned subsidiary of Severstal,for all of your ordinary shares in Celtic Resources Holdings plc. Centroferve is offering to acquire all of your Celtic Shares for 270p in cashfor each Celtic Share you hold. This Offer values the issued and to be issuedshare capital of Celtic at approximately £161 million - significantly higherthan its £115 million value on 17 September 2007, the day before Celticannounced that it had been approached regarding a potential offer. The Offer Document highlights a number of issues that are relevant inconsidering the Offer, including the following: • Centroferve's Offer represents an attractive premium to the market price of Celtic Shares. Our 270p per share Offer price represents a substantial: • 33.0% premium to the price on 17 September 2007, the day before Celtic announced it had been approached about a possible offer; • 41.4% premium to the one month volume weighted average share price*; • 43.6% premium to the three month volume weighted average share price*; and • 51.7% premium to the twelve month volume weighted average share price, meaning that Centroferve is offering you more than half as much again as the price your shares have been trading at in the market over this period*. * for the period to 17 September 2007 • The Offer is made to you at this time of cyclically high gold and molybdenum prices. • The Offer is fully financed and you will, if you accept the Offer and it becomes unconditional, be paid the cash consideration to which you are entitled within a maximum of 14 days after the later of: (i) the date of receipt of your Form of Acceptance and (ii) the date the Offer becomes unconditional. • The Offer removes significant risks currently borne by you, allowing you to capture full and certain cash value for your Celtic Shares (if you accept and the Offer becomes unconditional), and transfer to the Severstal Group all of the operational, development and commodity price risks inherent in Celtic's business. • Celtic has a history of destroying shareholder value and has significantly underperformed its peer group (other public traded gold companies operating in Russia and the CIS) in the gold sector. In the three year period to 17 September 2007, Celtic's share price decreased by approximately 48%. • Celtic has a history of broken promises. Since its admission to AIM in 2002, Celtic has not met a single production or cash cost target at its Suzdal mine. The record at the Zherek mine is little better. • Celtic's financial performance is abysmal, with a meagre operating return on invested capital of only 2.6% in 2006. In fact, Celtic's operating ROIC has been consistently below 6% since its admission to AIM in 2002. • Our Offer is the only offer that has been made to Celtic Shareholders. In the absence of our Offer or a competing offer, we believe that the current Celtic Share price is unsustainable, and that the price of Celtic Shares may fall substantially. Our Offer has created more value for you in one day than the Board of Celtic hasin 3 years-the Offer Price, which represents a premium of 33% above the shareprice on 17 September 2007, compares to the 48% decline in Celtic's share pricein the three years to 17 September 2007. The excellent value the Offer represents is demonstrated by the following: • Barrick Gold Corporation, the world's largest gold company by market value, has signed a letter of intent to accept the Offer in respect of its 6.6% stake in Celtic; • DWS Investments sold its 3.0% stake in Celtic to the Severstal Group on 28 September 2007 at a price of 270p per share-a clear endorsement of the Offer Price; • East Guardian Opportunity Fund sold its 4.6% stake in Celtic to the Severstal Group on 20 September 2007 at a price of 232p per share-well below the Offer Price; and • Aton International sold its 22.0% stake in Celtic to the Severstal Group on 14 August 2007 at a price of 220p per share-well below the Offer Price. As you see above, the evidence suggests that four of Celtic's largest currentand former shareholders think the Offer is great value. Notwithstanding, yourboard sought to deny you the opportunity to participate in the Offer. We believethat they value their own roles above shareholders' best interests andprioritise value to themselves over value to you. Centroferve has received an irrevocable undertaking to accept the Offer fromBluecone, a member of the Severstal Group, in respect of Celtic Sharesrepresenting approximately 29.7% of the issued share capital of Celtic, and theletter of intent referred to above from Barrick Gold Corporation. Accordingly,Centroferve has received commitments to accept or procure acceptance of theOffer in respect of 20,271,193 Celtic Shares, representing approximately 36.3%of the issued share capital of Celtic. I encourage you to read the Offer Document carefully for details of the Offer,its terms and benefits. To accept the Offer, you should complete the enclosedForm of Acceptance by following the instructions set out in the Form ofAcceptance and in paragraph 4 of Part II of the Offer Document. The Form ofAcceptance must be completed and returned by post to Capita Registrars, PO Box7117, Dublin 2, Ireland or (during normal business hours only) by hand to CapitaCorporate Registrars Plc, Unit 5, Manor Street Business Park, Manor Street,Dublin 7, Ireland as soon as possible, and in any event so as to be received nolater than 3pm (Dublin time) on 16 November 2007. Celtic Shareholders who arereturning a Form of Acceptance and accompanying documents to the Receiving Agentand are concerned that the documents may not reach Capita Registrars by 3pm on16 November 2007, may send the Form of Acceptance and accompanying documents bycourier to Capita Registrars at Unit 5, Manor Street Business Park, ManorStreet, Dublin 7, Ireland. If you are in any doubt as to the procedures for acceptance of the Offer orrequire assistance with completion of the Form of Acceptance, please telephonethe Centroferve helpline on freephone 1-800-556-693 or, if you are calling fromoutside Ireland, on + 44(0) 207-199-7811 (freephone 0800-987-8750 within theUK). I strongly endorse this Offer to you, and encourage you to ACCEPT THE OFFER. Yours Sincerely, Roman Deniskin Chief Executive, Severstal Resurs On behalf of Centroferve Limited The directors of Centroferve and the directors of Severstal acceptresponsibility for the information contained in this letter save that the onlyresponsibility accepted by the directors of Centroferve and by the directors ofSeverstal for information relating to the Celtic Group, which has been compiledfrom published sources, has been to ensure that such information has beencorrectly and fairly reproduced or presented (and no steps have been taken bythe directors of Centroferve or the directors of Severstal to verify thisinformation). To the best of the knowledge and belief of the directors ofCentroferve and the directors of Severstal (who have taken all reasonable careto ensure that such is the case), the information contained in this letter forwhich they accept responsibility is in accordance with the facts and does notomit anything likely to affect the import of such information. Any person who is a holder of 1% or more of the Celtic Shares may havedisclosure obligations under Rule 8.3 of the Irish Takeover Rules, effectivefrom the date of the commencement of the Offer Period. This letter should be read in conjunction with the full text of the accompanyingOffer Document and Form of Acceptance. Appendix IV of the Offer Documentcontains sources and bases for certain information contained in this letter andthe Offer Document. Appendix V of the Offer Document contains definitions ofcertain terms used in this letter and the Offer Document." OTHER INFORMATION Morgan Stanley & Co. Limited ("Morgan Stanley") is acting as exclusive financialadvisor and Freshfields Bruckhaus Deringer and Arthur Cox are acting as legaladvisors to the Severstal Group on the transaction. The directors of Centroferve and the directors of Severstal acceptresponsibility for the information contained in this announcement save that theonly responsibility accepted by the directors of Centroferve and by thedirectors of Severstal for information relating to Celtic, which has beencompiled from published sources, has been to ensure that such information hasbeen correctly and fairly reproduced or presented (and no steps have been takenby the directors of Centroferve or the directors of Severstal to verify thisinformation). To the best of the knowledge and belief of the directors ofCentroferve and the directors of Severstal (who have taken all reasonable careto ensure that such is the case), the information contained in thisannouncement for which they accept responsibility is in accordance with thefacts and does not omit anything likely to affect the import of suchinformation. Morgan Stanley is acting exclusively for Centroferve and Severstal Resurs and noone else in connection with the Offer and Morgan Stanley will not regard anyother person as a client in relation to the Offer and will not be responsible toanyone other than Centroferve and Severstal Resurs for providing the protectionsafforded exclusively to its clients or for providing advice in relation to theOffer, the contents of this announcement or any transaction or arrangement referred to herein. The Offer will not be made, directly or indirectly, in or into any jurisdictionwhere it would be unlawful to do so, or by use of the mails, or by any means orinstrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce, or by any facility of anational securities exchange of any jurisdiction where it would be unlawful todo so, and the Offer will not be capable of acceptance by any such means, instrumentality or facility from or within any jurisdiction where it would beunlawful to do so. Accordingly, copies of this announcement and all otherdocuments relating to the Offer are not being, and must not be, mailed orotherwise forwarded, distributed or sent in, into or from any jurisdictionwhere it would be unlawful to do so. Persons receiving such documents(including, without limitation, nominees, trustees and custodians) shouldobserve these restrictions. Failure to do so may invalidate any relatedpurported acceptance of the Offer. Notwithstanding the foregoing restrictions,Centroferve reserves the right to permit the Offer to be accepted if, in itssole discretion, it is satisfied that the transaction in question is exemptfrom or not subject to the legislation or regulation giving rise to therestrictions in question. This announcement does not constitute an offer to sell or an invitation topurchase or the solicitation of an offer to purchase or subscribe for anysecurities. Any response in relation to the Offer should be made only on thebasis of the information contained in the Offer Document or any document bywhich the Offer is made. This announcement should be read in conjunction withthe full text of the Offer Document and Form of Acceptance. Appendix IV of theOffer Document contains sources and bases for certain information contained inthis announcement, the Shareholder Letter and the Offer Document. Terms nototherwise defined in this announcement or the Shareholder Letter are defined inAppendix V of the Offer Document. This announcement, including information included or incorporated by referencein this announcement, may contain 'forward-looking statements' concerning theOffer, Celtic or the Celtic Group and the Severstal Group. Generally, the words'will', 'may', 'should', 'could', 'would', 'can', 'continue', 'opportunity','believes', 'expects', 'intends', 'anticipates', 'estimates' or similarexpressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differmaterially from those expressed in the forward-looking statements. Many ofthese risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such a future market conditions andthe behaviours of other market participants, and therefore undue relianceshould not be placed on such statements. Neither Centroferve nor Severstal assumes any obligation in respect of, nor intends to update, these forward-looking statements, except as required pursuant to applicable law. Any person who is a holder of one per cent. or more of the Celtic shares mayhave disclosure obligations under Rule 8.3 of the Irish Takeover Rules,effective from 18 September 2007. The Offer will be made in the United States pursuant to an exemption from the UStender offer rules provided by Rule 14d-1(c) under the US Exchange Act. Notice to US holders of Celtic shares: The Offer will be made for the securities of an Irish public limited companywhose shares are listed on the AIM market in the UK and is subject to Irish andUK disclosure requirements, which are different from those of the United States.The Offer will be made in the United States pursuant to applicable US tenderoffer rules and otherwise in accordance with the requirements of the IrishTakeover Rules. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offertimetable, settlement procedures and timing of payments that are different fromthose applicable under US domestic tender offer procedures and law. The receipt of cash pursuant to the Offer by a US holder of Celtic shares may bea taxable transaction for US federal income tax purposes and under applicableUS state and local, as well as foreign and other tax laws. Each holder of Celtic shares is urged to consult his independent professional adviserimmediately regarding the tax consequences of acceptance of the Offer. It may be difficult for US holders of Celtic shares to enforce their rights andany claim arising out of the US federal securities laws, since Centroferve andCeltic are located in non-US jurisdictions, and some or all of their officers and directors may be residents of non-US jurisdictions. US holders of Celticshares may not be able to sue a non-US company or its officers or directors ina non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves toa US court's judgement. In accordance with normal Irish and UK practice and pursuant to Rule 14e-5(b) ofthe US Exchange Act, Centroferve or its nominees, or its brokers (acting asagents), may from time to time make certain purchases of, or arrangements to purchase, Celtic shares outside the United States, other than pursuant to theOffer, before or during the period in which the Offer remains open foracceptance. These purchases may occur either in the open market at prevailingprices or in private transactions at negotiated prices. Any information aboutsuch purchases will be disclosed as required in Ireland and the UK, will bereported to a Regulatory Information Service of the UK Listing Authority andwill be available on the London Stock Exchange website,www.londonstockexchange.com. About Severstal Resurs and Severstal: In 2006 Severstal's Mining division produced 5.4 million tons of coalconcentrate, 2.2 million tons of coking coal, 2.1 million tons of steam coal,9.5 million tons of iron ore pellets and 4.5 million tons of iron oreconcentrate. The reserves and resources of the company were estimated to be 1.8billion tonnes of iron ore as at 1 January 2006 and 0.7 billion tonnes of coalas at 1 April 2006. Severstal Resurs also owns a number of scrap metal yards inthe Northwestern, central and Southern parts of Russia. Severstal is an international steel producer with a listing on the RussianTrading System and the London Stock Exchange. Incorporated in 1993, the companyfocuses on high value-added and unique niche products and has a successful track record of acquiring and integrating high-quality assets in North Americaand Europe. Severstal's mining assets in Russia are securing its supplies ofraw materials. In 2006 Severstal produced 17.6 million tonnes of steel and had revenues of US$12.4 bn, PBT of US$1.8 bn and EPS of US$1.27. For Further Information, please Contact: Jon Simmons, Ben BrewertonFD LondonPhone: +44 207 831 3113Email: [email protected]@fd.com Peter BacchusManaging DirectorMorgan Stanley & Co. LimitedPhone: +44 (0) 77899 43482Email: [email protected] Dmitry DruzhininOAO SeverstalPhone: +7 494 540 7766Email: [email protected] Leonid Solovyev, Anna ShumaylovaFD MoscowPhone: +7 495 795 0623Email: [email protected]@fd.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SVST.LCerillion