Share Issue/Capital Change • Nov 14, 2017
Share Issue/Capital Change
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14-Nov-2017 / 17:12 CET/CEST Dissemination of a RegulatoryAnnouncement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
Press-release Krasnodar November 14, 2017
PJSC "Magnit" ("Magnit" or the "Company"; MOEX and LSE ticker: MGNT), one of Russia's leading retailers, informs that its shareholder Lavreno Limited (the "Selling Shareholder") has initiated the process for the sale of approximately \$ 700 million worth of ordinary shares of the Company owned by it (the "Sale") in the formof local Ruble denominated shares. It is intended that after the Sale the Company will increase its share capital through an offering of newly issued shares (the "New Shares") in an open subscription (the "Open Subscription"). Subject to availability of necessary quantity of the New Shares after the exercise of the pre-emptive rights by other shareholders, the Selling Shareholder intends to useall of the proceeds fromthe Sale to purchase the New Shares and has indicated theintention to purchase an additional 250,000 of New Shares from Magnit. The Company intends to use the proceeds from the additional share issue to finance its store roll-out program, store renovation program and vertical integration program. Portion of the proceeds may be also used by the Company to optimise net indebtedness position, in line withCompany's overallconservative balancesheetstrategy and to financeitscurrent operating activities.
In connectionwith the Sale, shares in the Company are being offered byway ofan accelerated bookbuild (the"Bookbuild"), whichwill belaunched immediately following this announcement. Merrill Lynch International and VTB Capital plc (the "Joint Global Coordinators" and the "Joint Bookrunners")areacting as joint globalcoordinatorsand joint bookrunners in connectionwith the Sale.
The shares offered in the Sale ("Sale Shares") will be placed under the Bookbuild with international institutional investors in accordance with Regulation S of the US SecuritiesAct of 1933, as amended (the "US Securities Act"), and to qualified institutional buyers in the US in accordance with Rule 144Aof the US Securities Act. The Ruble price per share, the final number of shares sold, and allocations will be determined following completion ofthe Bookbuild.
Based on information available to the Company, the Selling Shareholder willacquire the Sale Shares fromMr. SergeyN. Galitskiy (Chief Executive Officer and shareholder of the Company) under a repo transaction with the Company's obligation to sell back to Sergey N. Galitskiy after a designated period.
In connection with the Sale, each of the Company, Mr. Sergey N. Galitskiy and the Selling Shareholder have agreed to lock-up arrangements on customary terms for 90 days following the completion of the Sale (subject to customary exceptions and with the prior consent of the Joint Global Coordinators).
Mr. SergeyN. Galitskiy hasalso madeclear his intention to remain along-termstrategicinvestor in the Company.
It is intended that the Sale will be followed by an increase in the Company's share capital through an offering of the New Shares (together with the Sale Shares, the "Shares") in the Open Subscription. The Open Subscription is expected to be approved by the Board of Directors of the Company immediately after the Sale, and the offering price ofthe NewShares isexpected to besetat thesamelevelas the price ofthe Sale Shares. The Company understands that, subject to availability of necessary quantity ofthe New Shares after the exercise ofthe pre-emptiverights by other shareholders, the Selling Shareholder intends to useall of the proceeds fromthe Sale to purchase the New Shares and has indicated intention to purchasean additional 250,000 of NewShares fromMagnit. Mr. SergeyN. Galitskiy has informed the Company that he does not intend to exercise his pre-emptiverights to subscribeforanyNewShares.
The Company intends to usethe proceeds fromthe Open Subscription to invest into storeroll-out programand verticalintegration program.
In agriculture, the Company plans to increase production capacitywithin existing categories of fresh produce and also launch construction of the second greenhouse complex in 2018 to grow tomatoes and other greenhouse vegetables. The target payback period for agricultural investments is up to 7 years. The Company intends to useapproximately 15%ofthe proceeds for thisarea.
The core project within in-house production is the 'Industrial Park Krasnodar', which is to specialize on production ofa wide assortment of food products (incl. among others, mushroomcompost, pasta, flour confectionary, sweets and candies, frozen prepared foods, ice-cream, frozen vegetables and fruits, juices, baby food, canned food, cheese, butter, fish products, snacks, pet food) as wellas non-food goods (incl. among others, hygiene, cosmetics and household products). The total investment in the 'Industrial Park Krasnodar' is estimated at up to RUB 40bn and the targeted payback period for in-house production investments is up to 4-5 years. The Company intends to use approximately 25%ofthe proceeds for investments in 'IndustrialPark Krasnodar'.
Aportion ofthe proceeds may also be used to optimise net indebtedness position, in line withCompany's overallconservative balancesheet strategy and to financeitscurrent operating activities.
The Joint Global Coordinators and Joint Bookrunners are acting for the Selling Shareholder in connection with the Sale and are not acting for the Company, the Selling Shareholder orany other person in any capacity in connectionwith the Open Subscription.
| Timothy Post | Head ofInvestor Relations Email: [email protected] Office:+7-861-277-4554 x 17600 Direct Line:+7-861-277-4562 |
|---|---|
| Dina Svishcheva | DeputyDirector, Investor Relations Email:[email protected] Office:+7-861-277-4554 x 15101 |
| MediaInquiries | Media Relations Department [email protected] |
Public Joint Stock Company "Magnit"is one of Russia's leading retailers. Founded in 1994, the company is headquartered in the southern Russian city ofKrasnodar. As of September 30, 2017, Magnit operated 36 distribution centers and 15,697 stores (11,743 convenience, 432 hypermarkets and 3,522 cosmetics stores) in 2,664 citiesand towns throughout 7 federalregions ofthe Russian Federation.
In accordance with the reviewed IFRS consolidated financialstatements for 1H 2017, Magnit had revenues of RUB 555 billion and an EBITDAof RUB 49 billion. Magnit's localshares are traded on the Moscow Exchange (MOEX:MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has a credit rating from Standard & Poor's of BB+. Measured by market capitalization, Magnit is one of the largest retailers in Europe.
The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed by any person forany purpose on theinformation contained in thisannouncement or itsaccuracy, fairness orcompleteness.
This announcement is not for publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan or any other jurisdiction in which the offer or sales would be prohibited by law. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should informthemselves about and observeany such restriction. Any failureto complywith theserestrictions may constitutea violation ofthesecurities laws ofany such jurisdiction.
This announcement does notcontain orconstitute an offer of, or the solicitation ofan offer to purchase or subscribe for, the Shares to any person in the United States, Australia, Canada or Japan or in any jurisdiction to whomor inwhich such offer or solicitation is unlawful. The Shares referred to hereinmay not be offered or sold in the United States unless registered under the US SecuritiesAct or offered in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act. The offer and sale of the Shares referred to herein have not been and will not be registered under the US Securities Act or under the applicable securities laws ofAustralia, Canada or Japan. Subject to certain exceptions, the Shares referred to herein may not be offered or sold inAustralia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen ofAustralia, Canada or Japan. There will be no public offer ofthe Shares in the United States,Australia, Canada or Japan orelsewhere.
The Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Sale the accuracy or adequacy ofthisannouncement.Any representation to thecontrary isacriminal offencein the United States.
Members of the general public are not eligible to take part in the Sale. In member states of the European Economic Area ("EEA") (each, a "Relevant Member State"), this announcementand any offer ifmade subsequently is sentand addressed to and directed only at persons who are "qualified investors" within the meaning of the Prospectus Directive ("Qualified Investors"). For these purposes, the expression "Prospectus
Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive), and includes any relevant implementingmeasurein the Relevant Member Stateand theexpression "2010 PDAmendingDirective"means Directive 2010/73/EU. In the United Kingdom thisannouncement is sent and distributed to, and directed at and addressed exclusively to Qualified Investors (i) who have professional experienceinmatters relating to investments fallingwithinArticle 19(5) ofthe Financial Servicesand MarketsAct 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (ii) who fall within Article 49(2)(A) to (D) of the Order, or (iii) to whom it may otherwise lawfully be communicated,and the Shares will only beavailableto,and any investmentactivity to which it relates will only beengaged inwith such personsand it should not berelied on by anyone other than such persons.
Certain statements within this announcement may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use offorward-looking terminology, including theterms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forwardlooking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth or strategies. Forward-looking statements speak only as ofthe datethey are made.
Each ofthe Company, the Selling Shareholder, the Joint Bookrunnersand their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward looking statement contained in this announcement whether as a result of new information, future developments or otherwise.
No prospectus or offering document has been or will be prepared in connection with the Sale. Any investment decision to buy securities in the Sale must be made solely on the basis of publicly available information. Such information is not the responsibility of and has not been independently verified by the Selling Shareholder (orany affiliatethereof) orany oftheJoint Bookrunners orany oftheir respectiveaffiliates.
Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons consideringmaking such investments should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the Sale. The value of the Shares can decrease as wellas increase. Potential investors should consult a professionaladvisoras to thesuitability ofthe Salefor the person concerned.
The Joint Bookrunners, each of which is authorised by the Prudential RegulationAuthority and regulated in the United Kingdom by the Financial ConductAuthority and the Prudential RegulationAuthority, are acting exclusively for the Selling Shareholder and no-one else in connection with the Sale. They will not regard any other person as their respective clients in relation to the Sale and will not be responsible to anyone other than the Selling Shareholder for providing the protections afforded to their respective clients, nor for providing advice in relation to the Sale, the contents of thisannouncement orany transaction,arrangement or other matter referred to herein.
In connectionwith the offering ofthe Sale Shares, theJoint Bookrunners orany oftheir respectiveaffiliates may take up a portion ofthe Sale Shares asa principal position and in thatcapacitymay retain, purchase, offer to sell or sellfor their own accounts such securitiesand any other securities of the Company or related investments in connection with the offering or otherwise. Accordingly, any references to the Sale Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, theJoint Bookrunners and any of their respective affiliates acting in such capacity. In addition the Joint Bookrunnersand any of their respective affiliates may enter into financing arrangements (including swaps or contracts for difference) with investors in connection with which the Joint Bookrunnersand any of their affiliates may fromtime to time acquire, hold or dispose of the Sale Shares. They do not intend to disclose the extent ofany such investment or transactions otherwisethan in accordance with any legal or regulatory obligation to do so.
None of the Joint Bookrunners or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted fromthe announcement) or any other information relating to the Company, the Selling Shareholder, their respectivesubsidiaries orassociated companies, whether written, oral or in a visual orelectronicform, and howsoever transmitted or madeavailable or forany loss howsoeverarising fromany use ofthisannouncement or itscontents or otherwisearising in connection therewith.
This announcement is not, and under no circumstances is to be construed as, an advertisement or offering of the New Shares in the Russian Federation. Theissue of the New Shares is subject to, among other things, approval by the Board ofDirectors of the Company and registration by the CentralBank ofthe Russian Federation. There is no assurance that such approvaland such registration can be obtained in a timelymanner or at all.
ISIN: US55953Q2021 Category Code: MSCU TIDM: MGNT LEICode: 2534009KKPTVL99W2Y12 OAM Categories:2.2. Inside information Sequence No.: 4848
End ofAnnouncementEQS News Service
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