Kazakhmys Plc (KAZ.L) said Wednesday that it agreed to transfer certain of its mature assets in the Zhezkazgan and Central Regions of Kazakhstan to Cuprum Holding, a company owned by Vladimir Kim and Eduard Ogay, together with a Working Capital Payment.
The parties have also entered into two Framework Services Agreements, enabling the Continuing Group and the Cuprum Holding Group to provide each other with transitional and longer-term services following completion.
Post-completion, the Continuing Group will continue to own the mining and producing assets in the East Region and the Bozymchak mine in Kyrgyzstan, as well as the Major Growth Projects, and it is proposed that the Company be renamed "KAZ Minerals PLC".
Based on the terms of the Transaction, Kazakhmys will transfer the companies owning the Disposal Assets to Cuprum Holding, along with a Working Capital Payment, which comprises: cash of $150 million; approximately $80 million representing the unspent amount of sustaining capital expenditure budget of the Disposal Assets for the period from 1 January 2014 up to 31 July 2014, the date of effective economic separation; certain MET and VAT refunds of approximately $10 million, to be received from the Government of Kazakhstan and due to the Disposal Assets; and any net cash flows attributable to the Disposal Assets for the period from the date of effective economic separation up to completion under the Share Transfer Agreement.
Therefore, it is currently estimated that the total Working Capital Payment will be approximately $240 million, plus the net cash flows attributable to the Disposal Assets for the period.
Following the Transaction, Eduard Ogay will step down from the Board so that he can take up his position as chief executive officer of Cuprum Holding managing the Disposal Assets, and Ogay will cease to have any executive or management authority at the Continuing Group.
Mr. Kim has indicated that he remains committed to retaining his holding in Kazakhmys and intends to remain on the Board following the Transaction.
Oleg Novachuk will remain as Chief Executive Officer of Kazakhmys. For the avoidance of doubt, he will not be a shareholder of, or have any management responsibility at, Cuprum Holding.
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