Severstal announced October 23 a global offering of its stock and the commencement of investor meetings. The Federal Service for Financial Markets earlier authorized the placement abroad of 253.9 million common shares of Severstal, or 24.99% of the company's charter capital.
"The Global Offering will comprise an offering by Frontdeal Limited (the Selling Shareholder) of existing ordinary shares, including in the form of GDRs, to international institutional and professional investors outside the Russian Federation, including to qualified institutional buyers in the United States under Rule 144A, and an offering of ordinary shares in the Russian Federation," the company earlier said in a statement.
About 90% of Severstal's stock belongs to Alexei Mordashov through several companies, including Frontdeal Limited. Mordashov intends to sell a part of his holding in Severstal during the global offering to raise the company's free float to 25%, the statement said.
After the global offering, Severstal intends to enlarge its charter capital through an open subscription for newly issued ordinary shares, for which the entities controlled by Mordashov, including Frontdeal Limited, intend to subscribe in proportion to their existing holdings, exercising their preemption rights and using some of the global offering proceeds, the statement said.
"Severstal intends to use the gross proceeds of this capital increase to continue improving the quality of its production facilities, and to improve operating efficiencies throughout its global operating platform, as well as to take advantage of potential opportunities to expand its core business, in line with its corporate strategy, including the funding of potential acquisitions of assets and participation in joint ventures," the statement said.
During its global offering, Severstal will place ordinary shares and Global Depositary Receipts, each GDR representing one ordinary share, the statement said.
Citigroup, Deutsche Bank and UBS Investment Bank are joint global coordinators and joint bookrunners for the global offering, Severstal said.
Severstal sought a merger with the world's number two steelmaker, Arcelor, but the deal, signed May 26, fell through when it was rejected by Arcelor shareholders June 30, to clear the way for a takeover of the Luxembourg-based company by the world's largest steel company, Mittal Steel. Arcelor paid Severstal 140 million euros (about $180 million) in compensation.
