Proposed Purchase of Rail Car Wagons (8320B)
25 Februar 2011 - 8:00AM
UK Regulatory
TIDMFXPO
RNS Number : 8320B
Ferrexpo PLC
25 February 2011
25 February 2011
Ferrexpo plc
("Ferrexpo" or the "Group" or the "Company")
Proposed acquisition of up to 1,000 newly built open rail car
wagons ("the Proposed Transaction")
Ferrexpo today announces that the Group's subsidiary, Open Joint
Stock Company Ferrexpo Poltava GOK Corporation ("FPM"), in which it
holds approximately 97.3% of the share capital, has agreed to buy
from the Open Joint Stock Company "Stakhanov Wagon Works" ("the
Supplier"), 400 newly built open rail car wagons of 12-9046 model
(the Open Wagons) with an option to purchase an additional 600 Open
Wagons.
The Supplier is an associate of Mr Kostyantin Zhevago, Chief
Executive Officer of Ferrexpo, and therefore a related party of the
Company. Accordingly, the Proposed Transaction is classified under
the Listing Rules as a "related party transaction" and is subject
to shareholder approval.
The Open Wagons are to be used for the transportation of FPM's
iron ore pellets to the Ukrainian border for delivery to its
customers. It is proposed that the Open Wagons shall be delivered
in consignments of 50 units per month, the first of which will be
delivered in March 2011. The price of an Open Wagon shall be
US$65,000, although this price shall, by agreement between the
Parties, be subject to adjustment for each monthly consignment to
reflect the current market price of open wagons in the CIS. The
price, however, of an Open Wagon shall not exceed US$120,000. There
is no fee attached to the option but the option shall expire on 31
December 2012.
The terms and conditions agreed between FPM and the Supplier
("the Parties") are set out in a conditional contract between the
Parties dated 25 February 2011. FPM shall fund the consideration
for the Open Wagons from its own cash resources, or shall put in
place a leasing arrangement with one of the leading Ukrainian banks
for all or some of the Open Wagons.
As part of its growth and marketing strategy, Ferrexpo is
committed to the development of its logistic capabilities by
investing in its own fleet of railway cars. The Directors believe
that such investment is required to support medium-term production
growth which is expected to increase by a third to 12 million
tonnes of pellets per annum by 2013.
A Circular providing additional detail on the Proposed
Transaction will be sent to shareholders today ahead of a General
Meeting to be held on 15 March 2011.
Michael Abrahams, Chairman of Ferrexpo commented:
"This acquisition adds to and benefits Ferrexpo's extensive
logistics capabilities and secures our access to quality wagons in
the extremely tight CIS market. This comes at an important time in
Ferrexpo's development with our production growing significantly in
the medium-term."
For further information, please contact:
Ferrexpo:
Ingrid McMahon +44 207 389 8304
Pelham Bell Pottinger
Charles Vivian +44 207 861 3126
James Macfarlane +44 207 861 3864
Notes to Editors:
Ferrexpo:
Ferrexpo is a Swiss headquartered iron ore company with assets
in Ukraine. It is principally involved in the production and export
of high quality iron ore pellets, which are used in the manufacture
of steel. Ferrexpo's resource base is one of the largest iron ore
deposits in the world. Its current producing asset, FPM, produced
approximately 10 million tonnes of iron ore pellets in 2010 making
it the largest exporter of pellets in the CIS. The Company has a
diversified customer base supplying steel mills in Austria, Serbia,
Slovakia, Czech Republic, Germany and other European states, as
well as in China, India, Japan, and other Asian countries. Ferrexpo
is listed on the main market of the London Stock Exchange under the
ticker FXPO. For further information, please visit
www.ferrexpo.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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