Daily analyst comments

Evraz is looking to consolidate stakes of minority shareholders in its subsidiaries.

Obviously, in this case, the company plans to invoke amendments to the Federal Law “On Joint Stock Companies” which permits mandatory buyout of the stakes of minority shareholders in the event that a majority shareholder consolidates over 95% of a company’s shares.

Evraz has petitioned FSS to buy the outstanding shares in Nizhny Tagil Iron & Steel Works (NTMK, Evraz’ largest subsidiary). The number of shares for buyout slightly exceeds 5% of NTMK’s charter capital.

In addition, Evraz plans to buy out shares of minority shareholders in Vysokogorsky GOK (VGOK) and Nakhodka Commercial Sea Port (NMTP), 5% and 6%, respectively. The buyout price for VGOK is Rub 0.0583 ($0.22) per share and NMTP at Rub 33 ($1.26) per share, which is close to market terms. The buyout offer becomes effective on March 2 and is valid for 70 days.

The buyout price for NTMK shares is to be announced after this move is approved by FSS. We believe it should also be in line with the market price, around $2.20 (based on the average share price for the last six months).

We do not rule out that the minority shareholders of West Siberian Iron and Steel Works (ZSMK) in which Evraz owns around 97% will also be made an offer to sell their shares.

We have cancelled our recommendations on NTMK and ZSMK due to initiation of the buyout procedure.