NC KMG Proposals for KMG EP: Factual update
NC KMG's advisers informed the advisers of KMG EP over the weekend that the current Proposals are certain and final, and will not be revised further.
Certainty of the Purchase Offer associated with the Proposals
Contrary to the opinion of the EP INEDs, there is no uncertainty over the offer to purchase Common Shares and Preferred Shares of KMG EP listed on the Kazakhstan Stock Exchange and GDRs of KMG EP listed on the London Stock Exchange (the "Purchase Offer") associated with the Proposals. The Purchase Offer is conditional only on the acceptance by Minority Shareholders of the proposed changes to the Charter and the Relationship Agreement.
The force majeure provision, which is customary for offers of this nature, was discussed with the EP INEDs' advisers before publication and amended in line with their comments. It is explicitly designed only to cover events outside NC KMG's control that make it impossible for the Purchase Offer to be completed, such as closure of the markets or war. Access to funding is specifically excluded from the force majeure definition. The force majeure definition is reproduced in full in the notes below for the convenience of readers.
In the extremely unlikely event that the force majeure provision was invoked, the changes to the Relationship Agreement and Charter would not take effect until the Purchase Offer was completed, so Minority Shareholders are fully protected in all circumstances.
2014 offer
The EP INEDs also refer to the withdrawal of a full buyout offer at \\$18.50 per GDR by NC KMG made in 2014. NC KMG was prepared to honour these commitments for six months (during which time they were not put to shareholders by the EP INEDs) while international oil prices halved. The offer was ultimately withdrawn after failure to reach agreement with the EP INEDs on price.
Performance of KMG EP
NC KMG also notes the comments of the EP INEDs on 18 July regarding the Statement of Operating Profit for the five months ended 31 May 2016, and the assertion by the EP INEDs that the Revised Circular may cause confusion among Minority Shareholders concerning the current profitability of KMG EP's operations.
NC KMG notes that the operating results do not appear to include any income tax expense for the period and, from a free cashflow perspective, appear to ignore expenditures on maintenance capital expenditures at both Embamunaigas JSC and Ozenmunaigas JSC. Furthermore the released information does not appear to include the performance of the Joint Ventures and Associates, so it remains unclear whether KMG EP is generating positive cashflows.
Note:
1. Full text of the Force Majeure definition
Force Majeure Event means an event beyond the control of the Offeror which prevents it from complying with any of its obligations under the Purchase Offer. For the avoidance of doubt, such event would be deemed to have occurred only if it makes it legally and/or practically impossible for the Offeror to comply with any of its obligations under the Purchaser Offer and may include, for instance, any general suspension of, or limitation on prices for, trading in securities in Kazakhstan, the United Kingdom, the United States or foreign securities or financial markets; a declaration of a banking moratorium or any suspension of payments in respect of banks in Kazakhstan, the United Kingdom, the United States or elsewhere; a commencement or declaration of war, armed hostilities, terrorist acts or other national or international calamity directly or indirectly involving Kazakhstan, the United Kingdom, the United States or any country in which either the Company or any of its subsidiaries conducts its business; any steps, any corporate action or any legal proceedings instituted or threatened against the Company in respect of its winding-up, dissolution, examination or reorganisation or for the appointment of a receiver, examiner, administrator, administrative receiver, trustee or similar officer of all or any part of its assets or revenues, or any analogous proceedings in any jurisdiction. For the avoidance of doubt, a Force Majeure Event shall not include the failure of the Offeror to obtain funding from a third party in order to proceed with the Purchase Offer.
2. About NC KMG
NC KMG, Central Asia's largest oil and gas company, is Kazakhstan's national operator for exploration, production, refining and transportation of hydrocarbons. The Company accounts for 28.6% of oil and 16% of gas production in Kazakhstan and is one of the country's largest employers, with over 76,000 employees. The consolidated oil and gas condensate output in 2015 amounted to 22,670 thousand tons, gas production - 7,255 MMcm, 16,317 thousand tons of oil were sent to the refineries for processing; the proven oil and gas condensate reserves are 801.2 mn tons. The Company represents the Government in the oil and gas sector, 90% of it is owned by the "Samruk-Kazyna" JSC, Kazakhstan's sovereign wealth fund, and 10% by the National Bank of the Republic of Kazakhstan. NC KMG has participatory interests in 38 oil & gas businesses in Kazakhstan and abroad.
Enquiries:
Media enquiries:
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Portland
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Oliver Pauley |
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This announcement does not constitute an offer or invitation to purchase any securities. Any offer (if made) will be made solely by certain offer documentation which will contain the terms and conditions of any such offer (if made) and details of how to accept it.
The purchase offer contemplated in the documentation referred to in this announcement will be made in compliance with, to the extent applicable, Regulation 14E ("Regulation 14E") under the US Securities Exchange Act of 1934, as amended (the "Exchange Act"). NC KMG is analyzing whether any such offer is exempt from certain of the requirements of Regulation 14E pursuant to Rule 14d-1(c) or 14d-1(d) under the Exchange Act (the "Cross-Border Tender Offer Exemptions").
In the event that NC KMG determines that such offer is exempt from certain of the requirements of Regulation 14E pursuant to a Cross-Border Tender Offer Exemption, it and any covered person may rely on any exemption or relief provided for by such Cross-Border Tender Offer Exemption, including any available exemption from the requirements of Rule 14e-5 that permits brokers undertaking the offer or their affiliates to acquire, or make arrangements to acquire, Shares or GDRs outside the United States other than pursuant to such offer, on or off the Kazakhstan Stock Exchange or the London Stock Exchange or otherwise, before or during the timeframe of the offer, so long as those acquisitions or arrangements comply with applicable Kazakhstan Laws and practice and the provisions of such exemption. In such event, information about any such acquisitions or arrangements which is made public in Kazakhstan will be made available, including in the United States.
This communication is only being distributed to and is only directed at persons who are (i) outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) persons who are holders of the Securities or who otherwise fall within Article 43 of the Order or (iv) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order or (v) any other persons to whom this communication may lawfully be communicated (all such persons together being referred to as "relevant persons"). Any person who is not a relevant person should not act or rely on this document or any of its contents.
This announcement, including information included in the documentation referred to in this announcement, may contain "forward-looking statements" concerning NC KMG. All statements other than statements of historical facts included in this document may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Such forward looking statements involve risks and uncertainties that could significantly affect expected results or outcomes and are based on certain key assumptions. Many factors could cause actual results or outcomes to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. NC KMG assumes no obligation and does not intend to update these forward-looking statements, except as required pursuant to applicable law.
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