On March 26, 2021, Nova Resources B.V., in other words, Vladimir Kim and Oleg Novachuk, once again prolongated the offer to the KAZ Minerals PLC minor shareholders to buy back their shares. It seems like they really need it. The question is why?
You can find the full text of the offer at the KASE website (follow this link). We are also presenting several quotes from an Inbusiness.kz publication titled «Kim and Novachuk Increase the Cash Offer to KAZ Minerals Minor Shareholders to 8.5 Pounds Sterling Per Share» (text in bold by KZ.expert) –
«The major co-owners of KAZ Minerals, Vladimir Kim and Oleg Novachuk, acting though Nova Resources B.V. (Bidco) have once again increased their offer to the minor shareholders to purchase their share of the company from 7.8 pounds sterling to 8.5 pounds sterling per each share.
Apart from that, under the terms of the final increased offer, KAZ Minerals is to pay a special dividend in the amount of 0.27 $ per each share, announced the company on Friday. Therefore, in total, the minor shareholders have been offered 8.69 pounds sterling per share».
The document also says that «the terms of the Final Increased Offer are final and will not be increased» while «KAZ Minerals shareholders are urged to accept the Final Increased Offer as soon as possible and no later than April 9».
Judging by the fact that Vladimir Kim and Oleg Novachuk (both are included in the Forbes Kazakhstan richest entrepreneurs list holding the first and the seventeenth positions in the rating, respectively) have prolongated the offer for the second time and are urging the KAZ Minerals minor shareholders to sell their shares, this is something they really need. And this begs the question — why?
The answer is partly contained in the Inbusiness.kz publication —
«After purchasing the shares from all the shareholders who have accepted the offer, the major owners will have consolidated about 59,3% of the mining company considering that, directly and through affiliated structures, Kim and Novachuk own 39,38% of KAZ Minerals».
This, however, is not an exhaustive answer. We at KZ.expert believe that, first and foremost, they need to increase their share in the UK corporation operating in Kazakhstan in order to drop off the radar and stop attracting attention of not only foreign investors but regulators as well.
This clearly follows from the going-forward plans of Vladimir Kim and Oleg Novachuk (quoting) -
«If, following the results of the offer, Nova Resources manages to purchase no less than 75% of the KAZ Minerals shares, FCA and the LSE will receive applications for the company’s delisting. As expected, trading of the KAZ Minerals shares at the KASE will be stopped as well».
And if the major shareholders will purchase 90 and more percent of the shares, then
«KAZ Minerals will be reregistered as a private limited liability company».
Even though the KAZ Minerals major shareholders are trying to explain their intentions by the market unpredictability and the corporate problems, their words and logic look rather laughable (if you know the story of this business-project and are aware of who has been «shielding» it from the moment of its creation).
Nonetheless, here is how Oleg Novachuk assesses the situation in the official statement —
«Mr. Kim and I believe that KAZ Minerals has made a significant progress as a public company since its listing in 2005. However, considering the current market unpredictability and the corporate situation related to the on-going projects, we believe that the company’s long-term interests will be best served by KAZ Minerals as a private organisation.
We are still convinced that implementing a riskier and more capital-intensive strategy serves as the most effective long-term development path. Having said that, we realise that our actions may not by in sync with the opinion of our investors.
By taking this important step, we want to make sure that KAZ Minerals shareholders have been offered an opportunity to receive the maximal return on their investments».
Let us repeat, there some truth to the cited statements and explanations. Yes, given the high global unpredictability and the growth of apprehension among foreign investors towards costly and lengthy projects in the resource-based sectors of economy especially in the developing countries with unstable political systems, a private corporation will often have an easier time obtaining funds not on open markets but through direct negotiations.
And this is also true regarding such a costly project as the Baimskaya copper field in the Russian Federation.
Nonetheless, it is but a part of the whole truth. In our opinion, the main factor here is that, after the passing of the First President of Kazakhstan whose business-interests have been «fronted» by Vladimir Kim for a quarter of a century now, a seamless inheriting of Nursultan Abishevich’s fortune and distributing it between the children (including the three daughter and the two sons) and his third wife will become one of the main priorities of the Nazarbayev clan.
For this reason, we are certain that the exodus of KAZ Minerals from the LSE and the KASE and its reregistering as a private limited liability company were as unavoidable as the incoming of spring.
