27 December 2006
Новолипецкий металлургический комбинат
Novolipetsk Steel (NLMK) disposes of stakes in energy assets
Novolipetsk Steel, NLMK (LSE: NLMK), a leading Russian steel producer, today announced it has completed the disposal of its stakes of 14.11% in OJSC “Lipetskenergo”, 14.11% in OJSC “Lipetskenergosbyt”, 2.7% in OJSC “TGK-4”, 14.11% in OJSC “Lipetsk supply network”, 19.39% in OJSC “Lipetskoblgaz” and 51% in OJSC “LGEK”.
The disposal is in line with NLMK’s recently announced sustainable growth strategy for 2007-2011. One of the key elements of this strategy is an optimization of the asset portfolio of the Company. According to the decision of the Board of Directors of February 2006, NLMK’s stakes in energy assets were classified as non-core investments. Minority stakes in regional energy companies are not considered strategic since they do not lead to control or influence over those companies’ operating activities.
Before the transaction was agreed, an independent evaluation of the energy companies was performed. Most of these companies are non-public business organizations and the stakes in those companies are low liquid. The disposal was performed at 10% premium to the value established by the independent valuation or 3 month average market price of corresponding securities where available. The stakes in all energy companies were sold to Immenso Enterprises Limited, which is controlled by NLMK’s main shareholder.
The transaction was closed at following prices:
14.11% in OJSC “Lipetskenergo” – RUR417m (USD 15.83m)
14.11% in OJSC “Lipetskenergosbyt” – RUR11m (USD 0.42m)
2.7% in OJSC “TGK-4” – RUR1 032m (USD 39.17m)
14.11% in OJSC “Lipetsk supply network” – RUR96m (USD 3.64m)
19.39% in OJSC “Lipetskoblgaz” – RUR415m (USD 15.75m)
51% in OJSC “LGEK” – RUR99m (USD 3.76m)
The total cash consideration received by NLMK is RUR2,070m (USD 78.56m). Proceeds from the transaction will be directed to the modernization and development of in-house energy facilities.