TIDM67LN TIDMTTM
RNS Number : 0398Z
JSC National Company Kazmunaygas
09 March 2017
9 March 2017
THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION TO ANY PERSON LOCATED
OR RESIDENT IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE
SUCH ANNOUNCEMENT.
JSC NC "KazMunayGas" ("KMG" or the "Issuer") and KazMunaiGaz
Finance Sub B.V. ("KMG Finance") announce a consent solicitation in
relation to the outstanding notes issued by KMG detailed in the
table below (each of the seven series of notes referred to below, a
"Series", and all outstanding notes of all Series collectively, the
"Notes")
Regulation
S Global Rule 144A
Note ISIN Global Note
Description / Common ISIN / Common
of Notes Code Code / CUSIP Amount Issued Amount Outstanding
------------------- ------------- --------------- ------------------- -------------------
U.S.$1,600,000,000 XS0373641009 US48667QAA31 U.S.$1,600,000,000 U.S.$1,600,000,000
9.125% notes / 037364100 / 037371971
due 2018 (the / 48667QAA3
"2018 Notes")
U.S.$1,500,000,000 XS0506527851 US48667QAE52 U.S.$1,500,000,000 U.S.$1,371,437,000
7.000% notes / 050652785 / 050653145
due 2020 (the / 48667QAE5
"2020 Notes")
U.S.$1,250,000,000 XS0556885753 US48667QAF28 U.S.$1,250,000,000 U.S.$1,130,274,000
6.375% notes / 055688575 / 055708223
due 2021 (the / 48667QAF2
"2021 Notes")
U.S.$1,000,000,000 XS0925015074 US46639UAA34 U.S.$1,000,000,000 U.S.$406,564,000
4.400% notes / 092501507 / 092527441
due 2023 (the / 46639UAA3
"2023 Notes")
U.S.$500,000,000 XS1132166031 US48667QAH83 U.S.$500,000,000 U.S.$123,177,000
4.875% notes / 113216603 / 113217545
due 2025 (the / 48667QAH8
"2025 Notes")
U.S.$2,000,000,000 XS0925015157 US46639UAB17 U.S.$2,000,000,000 U.S.$512,249,000
5.750% notes / 092501515 / 092527425
due 2043 (the / 46639UAB1
"2043 Notes")
U.S.$1,000,000,000 XS1134544151 US48667QAK13 U.S.$1,000,000,000 U.S.$30,112,000
6.000% notes / 113454415 / 113454202
due 2044 (the / 48667QAK1
"2044 Notes")
Overview
The Issuer has today, in conjunction with KMG Finance, provided
notices of meetings (the "Notices of Meetings") to solicit proxies
(the "Solicitation") from the beneficial holders of the outstanding
Notes (the "Noteholders") to consider and, if thought fit, pass
Extraordinary Resolutions (the "Extraordinary Resolutions") at
meetings of the Noteholders (the "Meetings") in relation to certain
consents and amendments (the "Consents and Amendments") being
sought to (i) the terms and conditions of the 2018 Notes (the "2018
Note Conditions"), (ii) the terms and conditions of the 2020 Notes
(the "2020 Note Conditions"), (iii) the terms and conditions of the
2021 Notes (the "2021 Note Conditions"), (iv) the terms and
conditions of the 2023 Notes (the "2023 Note Conditions"), (v) the
terms and conditions of the 2025 Notes (the "2025 Note
Conditions"), (vi) the terms and conditions of the 2043 Notes (the
"2043 Note Conditions"), and (vii) the terms and conditions of the
2044 Notes (the "2044 Note Conditions", which collectively with the
2018 Note Conditions, the 2020 Note Conditions, the 2021 Note
Conditions, the 2023 Note Conditions, the 2025 Conditions and the
2043 Conditions are referred to as the "Conditions"), all as more
fully described in the Consent Solicitation Memorandum (the
"Memorandum") dated 9 March 2017 (the "Proposal").
Subject to the terms of the Proposal and, unless such condition
is waived by the Issuer, provided all Extraordinary Resolutions are
passed and become effective and upon the occurrence of the
Effective Date (see "Timetable" below), Noteholders who validly
vote in favour of the Proposal in accordance with the Solicitation
will be entitled to receive the applicable Early Consent Fee on the
Settlement Date (see "Early Consent Fee" below). Noteholders are
advised to refer to the Memorandum for meanings of capitalised
terms used in this announcement, the full terms of the Solicitation
and the procedures related thereto.
The Notices of Meetings convening the Meetings at the offices of
Dechert LLP, 160 Queen Victoria Street, London EC4V 4QQ, at which
the Extraordinary Resolutions to approve the Proposal and its
implementation will be considered and, if thought fit, passed, have
been published in accordance with the Conditions.
The initial meeting (in respect of the 2018 Notes) will commence
at 10:00 a.m. (London time) on 31 March 2017, with subsequent
Meetings in respect of each other Series being held at 15 minute
intervals thereafter or after the completion of the preceding
Meeting (whichever is later).
Background to and Rationale for the Proposal
The KazMunayGas International N.V. Sale
In line with the Group's overall strategy to focus on its
operations in Kazakhstan, as well as the State's privatisation
programme, KMG is considering selling all or a significant portion
of its stake in KazMunayGas International N.V ("KMG International")
in one or more transactions over the near to medium term to the
effect that KMG will no longer hold at least the Restricted
Percentage (i.e., 75 per cent.) of the shares of Capital Stock of
KMG International (collectively, the "KMG International Sale"). KMG
International has been considered and recorded in KMG's
consolidated Financial Statements as a "discontinued operation" and
the assets and liabilities of KMG International have been
considered and recorded as "assets classified as held for sale"
since December 2015 (see Note 4 to the interim unaudited
consolidated financial statements of KMG as at and for the nine
months ended 30 September 2016).
To this end, KMG has entered into an agreement with CEFC China
Energy Company Limited (the "CEFC Agreement") to sell 51 per cent.
of the shares of Capital Stock it holds in KMG International as of
the date of this Memorandum to CEFC China Energy Company Limited or
one or more of its affiliates ("CEFC") for a purchase price payable
by CEFC to KMG of U.S.$680 million (the "Proposed KMG
International/CEFC Sale"). Under the CEFC Agreement, the Proposed
KMG International/CEFC Sale is subject to the satisfaction of a
number of conditions precedent, including, but not limited to,
receipt of the KMG International Sale Consent (as defined below),
to the extent necessary or required by the respective facilities,
consents of the lenders under KMG's debt facilities and regulatory
approvals in all applicable jurisdictions; the CEFC Agreement
further contemplates that the Proposed KMG International/CEFC Sale
is expected to be completed by the end of the first half of 2017,
although KMG and CEFC may agree in writing to extend such
completion date as they deem necessary or appropriate.
KMG is of the view that, as required by paragraph (i) of
Condition 4(c) (Limitation on Sales of Assets and Subsidiary Stock)
of the Conditions, the terms of the Proposed KMG International/CEFC
Sale as set forth in the CEFC Agreement comprise arm's length terms
and that, in particular, the purchase price to be received by KMG
in connection with the Proposed KMG International/CEFC Sale under
the CEFC Agreement comprises the Fair Market Value. The Board of
Directors has approved the terms of the Proposed KMG
International/CEFC Sale, including the purchase price, under the
CEFC Agreement based on an independent appraisal obtained from an
Independent Appraiser.
KMG expects that the Proposed KMG International/CEFC Sale will
reduce the level of KMG's consolidated debt by approximately
U.S.$0.6 billion and, that, consequently, the Proposed KMG
International/CEFC Sale will reduce the Group's debt service and
thereby improve its overall liquidity position, while also
providing funds to the Group to be used for the purposes of
maintaining the Group's financial stability.
Whether or not the Proposed KMG International/CEFC Sale is
completed, KMG may pursue sales of additional stakes in KMG
International, by way of merger, consolidation or similar
transactions relating to shares of Capital Stock in KMG
International or by way of sales or dispositions of assets. In all
cases, however, KMG expects to effect any such sale only if the
proposed terms comprise arm's length terms and that, in particular,
the purchase price to be received by KMG is at least equal to the
Fair Market Value. The Fair Market Value of the purchase price for
any such sale will be determined by the Board of Directors in good
faith or, if required under Conditions, by an Independent
Appraiser. For the avoidance of doubt, any such additional sales or
dispositions described in this paragraph shall be deemed to be
included in the definition of "KMG International Sale" and as such,
are the subject of the requested waiver described below.
Based on all of the foregoing, KMG expects that, notwithstanding
that the KMG International Sale will result in KMG foregoing some
positive contribution to EBITDA, the combined effects of the KMG
International Sale will result in an improvement to KMG's
consolidated net debt/EBITDA ratio. Details regarding the revenues,
profit, assets and liabilities attributable to KMG International
after eliminations of intergroup transactions are set out in the
note entitled "Discontinued operations and assets classified as
held for sale" to the Financial Statements available at
http://www.kmg.kz/en/investors/reports/reports/.
Syndicated and Bilateral Facilities
Consents and amendments will separately be sought under certain
of KMG's syndicated and bilateral facilities with respect to the
KMG International Sale.
Ratings Agencies
KMG has discussed the transactions contemplated by the
Memorandum with Fitch Ratings Limited ("Fitch"), Moody's Investor
Services Limited ("Moody's") and Standard & Poor's Credit
Market Services Europe Limited ("S&P"). Based on these
discussions, KMG expects that none of these rating agencies will
downgrade or take any other negative action in respect of the
credit ratings assigned by it to the Notes (Moody's: Baa3; S&P:
BB; and Fitch: BBB-) at this time as a result of the Proposed KMG
International/CEFC Sale.
Requested Waiver
In order to permit the KMG International Sale, consent of the
Noteholders is being sought to waive any potential breach of the
covenant set out in Condition 4(c)(ii) (Limitation on Sales of
Assets and Subsidiary Stock) pursuant to the Conditions that may
arise as a result of the KMG International Sale (the "KMG
International Sale Consent"). The KMG International Sale Consent is
required because KMG expects that, following the KMG International
Sale (including, but not limited to, the Proposed KMG
International/CEFC Sale by itself), KMG will no longer retain at
least the Restricted Percentage (i.e., 75 per cent.) of Capital
Stock of KMG International, as required pursuant to Condition
4(c)(ii). The KMG International Sale Consent shall apply, and
remain valid with respect to, any KMG International Sale undertaken
so long as any of the Notes remain outstanding.
Judgment Clause Amendment
Consent of the Noteholders is also being sought to the amendment
of Condition 10(e) (Judgments) to increase the basket for a
judgment event of default from U.S.$10,000,000 to U.S.$50,000,000
(the "Judgment Clause Amendment").
KMG believes that the Judgment Clause Amendment is fair and
reasonable for the following reasons:
-- Condition 10(e) should only be applicable in the event of a
failure by KMG or any subsidiary to pay any final judgment of a
material amount. KMG is of the view that the existing basket of
U.S.$10,000,000 does not meet this materiality threshold when
considered in the context of the Group's business and activities
taken as a whole.
-- The Judgment Clause Amendment is consistent with that
provided for in certain of KMG's syndicated and bilateral debt
facilities and, in line with its prior efforts, KMG wishes to align
the terms of the Notes with parallel provisions across its debt
platform
Record Date
Noteholder consent is being sought to approve, with retroactive
effect, the fixing by the Issuer of the Record Date (see
"Timetable" below) in respect of the Proposal at 20 March 2017
notwithstanding the requirements of the Trust Deeds. The Record
Date is used to determine which DTC Participants will be allowed to
vote on the Proposal, and only those Direct Participants in DTC
appearing on the omnibus proxy issued by DTC on the Record Date
will be entitled to submit Forms of Sub-Proxy. The Trust Deeds
provide that the record date for the purposes of any meeting may
not be more than ten days prior to the time fixed for such
meeting.
Early Consent Fee
Noteholders who validly submit an Electronic Voting Instruction
or who validly submit a Form of Sub-Proxy, as applicable, in favour
of the relevant Extraordinary Resolution that is received by the
relevant Tabulation Agent on or prior to the Early Consent
Expiration Time and who have not validly revoked their Electronic
Voting Instruction or Form of Sub-Proxy, as applicable, will be
entitled to receive the applicable Early Consent Fee, provided that
all Extraordinary Resolutions that are the subject of the Proposal
are duly passed (unless such condition is waived by the Issuer) and
become effective in accordance with their terms and the Effective
Date has occurred.
The Early Consent Fee will be paid as consideration for the
relevant Noteholders' approval of the relevant Extraordinary
Resolution, and, unless such condition is waived by the Issuer, are
subject to the passing of the Extraordinary Resolutions relating to
all seven Series. Unless such Condition is waived by the Issuer, no
Early Consent Fee shall be payable to any Noteholder to the extent
any one or more Extraordinary Resolutions is not duly passed at the
relevant Meeting or, as the case may be, Adjourned Meeting,
notwithstanding that any other Extraordinary Resolution was duly
passed at the relevant Meeting or, as the case may be, Adjourned
Meeting.
The Early Consent Fee will be U.S.$2.00 in each case per
U.S.$1,000 in principal amount of Qualifying Notes (as defined in
the Memorandum) in each Series held by such Noteholder.
Revocation of instructions
Noteholders who have submitted Electronic Voting Instructions or
Forms of Sub-Proxy, as applicable, have a right to revoke such
instruction in the following circumstances only: (i) if required by
law or permitted by the relevant Trust Deed (as applicable); or
(ii) if KMG and KMG Finance consider that any modification or
amendment (excluding any material modification or amendment to the
relevant Extraordinary Resolution which may not be made during the
relevant Meeting notice period) is materially prejudicial to
Noteholders compared with the initial terms of the Proposal and
Solicitation, as more fully described in the Memorandum.
Expected Timetable (assuming the Meeting is not adjourned)
Event Date and Time
--------------------------------------------------------- ---------------------------------------------------------
Launch Date/Announcement of the Solicitation 9 March 2017
Announcement of the Solicitation and each Notice of
Meeting given to Noteholders of each Series
through the Clearing Systems.
Memorandum made available to Noteholders via the
Tabulation Agent (free of charge).
Record Date 5:00 p.m. (EST) / 10:00 p.m. (London time) on 20 March
Record Date in respect of DTC Notes. Only Direct 2017
Participants in DTC at this time and date
will be entitled to submit a Form of Sub-Proxy
Early Consent Expiration Time and Early Consent Date 5:00 p.m. (EST)/ 10:00 p.m. (London time) on 21 March
Deadline for Noteholders to deliver or procure delivery 2017
of Electronic Voting Instructions
or Forms of Sub-Proxy in favour of the relevant
Extraordinary Resolution to the Tabulation
Agent to be eligible to receive the applicable Early
Consent Fee.
Expiration Time and Expiration Date 11:00 a.m. (EST) / 4:00 p.m. (London time) on 29 March
Deadline for Noteholders to deliver or procure delivery 2017
(of Electronic Voting Instructions
or Forms of Sub-Proxy in favour of the relevant
Extraordinary Resolution to the Tabulation
Agent to be eligible to vote but not to receive the
Early Consent Fee).
Latest time for Noteholders to appoint the Tabulation
Agent (or its nominee) as proxy to attend
the relevant Meeting and vote in respect of the
applicable Extraordinary Resolution or to
appoint another proxy to attend and vote at the relevant
Meeting in accordance with the provisions
of the relevant Trust Deed and the relevant Notice of
Meeting.
Date of the Meetings 31 March 2017
Announcement of results 31 March 2017, or as soon as reasonably practicable
The announcement via the Clearing Systems of the results after the Meetings
or notice of adjournment of the Meetings,
as the case may be.
Effective Date Not later than 2 days after all Extraordinary
If all Extraordinary Resolutions are passed, without Resolutions have been passed
requiring any adjourned meetings, the
date on which all Proposed Supplemental Trust Deeds and
the Trustee Consent Letter shall be
executed and delivered and become effective
Settlement Date On or about 7 April 2017
Settlement in respect of the Early Consent Fee.
The Issuer will make (or cause to be made) announcements in
connection with the Consent Solicitation in accordance with
applicable law by delivery of notices to the Clearing Systems for
communication to Direct Participants and through RNS, the news
distribution service operated by the London Stock Exchange. Copies
of all announcements, notices and press releases may also be
obtained from the Tabulation Agent at its address and telephone
number as set forth below. Delays may be experienced in respect of
notices delivered to the Clearing Systems and Noteholders are urged
to contact the Solicitation Agents or the Tabulation Agent for the
relevant announcements during the course of the Consent
Solicitation, the contact details for which are set forth
below.
Solicitation Agents
Any questions from any person (other than persons located and/or
resident in Kazakhstan) regarding the terms of the Proposal or the
Solicitation may be directed to the Solicitation Agents at the
addresses and telephone numbers specified below:
SOLICITATION AGENTS
Deutsche Bank AG, London UBS AG, London Branch
Branch 5 Broadgate
Winchester House London EC2M 2QS
1 Great Winchester United Kingdom
Street In Europe and Asia:
London EC2N 2DB Attention: Liability
United Kingdom Management Group
Attention: DCM / LM Tel: +44 (0) 20 7568
team 2133
By telephone: +44 (0) Email: ol-liabilitymanagement-eu@ubs.com
20 754 76568/ In the Americas:
+44 (0) 207 545 8011 Attention: Liability
Management Group
Collect: +1 (203) 719-4210
Toll free: +1 (888) 719-4210
Tabulation Agent
Noteholders may obtain copies of the Memorandum, the Notices of
Meetings and any announcements in connection with the Solicitation
from the Tabulation Agent:
TABULATION AGENT
------------------------------------------
Lucid Issuers Services Limited
Tankerton Works
12 Argyle Walk
London WC1H 8HA
United Kingdom
Attention: David Shilson / Paul Kamminga
By telephone: +44 207 704 0880
By email: kmg@lucid-is.com
------------------------------------------
Neither the Solicitation Agents, the Tabulation Agent, the
Trustee, KMG nor KMG Finance takes any responsibility for the
contents of this announcement and none of KMG, KMG Finance, the
Solicitation Agents, the Tabulation Agent, the Trustee or any of
their respective directors, employees or affiliates makes any
representation or recommendation whatsoever regarding the
Solicitation, or any recommendation as to whether Noteholders
should provide their consent in the Solicitation. This announcement
must be read in conjunction with the Memorandum. This announcement
and the Memorandum contain important information which should be
read carefully before any decision is made with respect to the
Solicitation. If any Noteholder is in any doubt as to the action it
should take, it is recommended to seek its own advice, including as
to any tax consequences, from its stockbroker, bank manager,
solicitor, accountant or other independent adviser.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCEAFDNEAPXEFF
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March 09, 2017 06:40 ET (11:40 GMT)
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