United Company RUSAL Plc: Continuing Connected Transactions Sale of Raw Materials

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UNITED COMPANY RUSAL PLC (Paris:RUSAL) (Paris:RUAL)
(Incorporated under the laws of Jersey with limited liability)
(Stock Code: 486)

CONTINUING CONNECTED TRANSACTIONS
SALE OF RAW MATERIALS

Reference is made to the announcements of the Company dated 23 December 2014, 13 September 2016, 30 December 2016 and 28 February 2017 in relation to the Previously Disclosed Raw Materials Supply Contracts.

The Company announces that on 09 March 2017, a member of the Group, as seller, entered into the Addendum to the Raw Materials Supply Contract with an associate of Mr. Deripaska, as buyer.

THE ADDENDUM TO THE RAW MATERIALS SUPPLY CONTRACT

Reference is made to the announcements of the Company dated 23 December 2014, 13 September 2016, 30 December 2016 and 28 February 2017 in relation to the Previously Disclosed Raw Materials Supply Contracts.

The Company announces that on 09 March 2017, a member of the Group, as seller, entered into an addendum to the original contract, dated 8 April 2015, with an associate of Mr. Deripaska, as buyer, with major terms set out below (the “Addendum to the Raw Materials Supply Contract”):

   

Date of
addendum

 

Seller
(member of
the Group)

 

Buyer (associate
of Mr.
Deripaska)

 

Raw
materials to
be supplied

 

Estimated
delivery
volume for
the year
ending 31
December
2017

 

Estimated
consideration
payable for
the year
ending 31
December
2017
excluding
VAT (USD)

 

Scheduled
termination
date

 

Payment
terms

1  

09 March
2017, which
is an
addendum to
the original
contract,
dated 8 April
2015.

 

Joint Stock
Company
“United
Company
RUSAL-
Trade
House”

 

Limited Liability
Company
“Autocomponent-
Group GAZ”

  Silicon  

150 metric
tons

  256,500  

31 December
2017. The
addendum
may be
extended
automatically
for the
following
calendar year

 

100%
prepayment

   

Total
estimated
consideration
payable for
the year

                  256,500        

Note:

1. The contract price is agreed between the parties and based on per unit price of USD1,710/ton.The consideration under the Addendum to the Raw Materials Supply Contract is to be paid in cash via bank transfer.

THE ANNUAL AGGREGATE TRANSACTION AMOUNT

Pursuant to Rule 14A.81 of the Listing Rules, the continuing connected transactions contemplated under the Addendum to the Raw Materials Supply Contract and the Previously Disclosed Raw Materials Supply Contracts should be aggregated, as they were entered into by members of the Group with the associates of Mr. Deripaska/En+, and the subject matter of each contract relates to the supply of raw materials by the Group to the associates of Mr. Deripaska/En+.

The annual aggregate transaction amount that is payable by the associates of Mr. Deripaska/En+ to the Group under the Addendum to the Raw Materials Supply Contract and the Previously Disclosed Raw Materials Supply Contracts for the financial year ending 31 December 2017 is estimated to be approximately USD15.962 million.

The consideration payable under the Addendum to the Raw Materials Supply Contract is calculated by multiplying the unit price by the volume. The unit price is set out in the note to the table above.

The consideration payable under the Addendum to the Raw Materials Supply Contract has been arrived at after arm’s length negotiation with reference to the market price and on terms no less favourable than those prevailing in the Russian market for raw materials of the same type and quality and those offered by members of the Group to independent third parties customers. The annual aggregate amount is the maximum amount of consideration payable under the terms of the Addendum to the Raw Materials Supply Contract based on the delivery volume estimated by Directors and the demand from the buyer.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The Directors consider that the entering into of the Addendum to the Raw Materials Supply Contract is for the benefit of the Company as the sale is profitable and the Group is assured of payment on a timely basis and there are less financial risks.

The Directors (including the independent non-executive Directors) consider that the Addendum to the Raw Materials Supply Contract is on normal commercial terms which are fair and reasonable and the transactions contemplated under the Addendum to the Raw Materials Supply Contract are in the ordinary and usual course of business of the Group and in the interests of the Company and its shareholders as a whole.

None of the Directors has a material interest in the transactions contemplated under the Addendum to the Raw Materials Supply Contract, save for (i) Mr. Deripaska, who is a director of Basic Element and is interested in more than 50% of the issued share capital of Basic Element; (ii) Ms. Gulzhan Moldazhanova, who is a director of Basic Element; and (iii) Ms. Olga Mashkovskaya, who is a deputy chief executive officer for finance of Basic Element. Basic Element is the holding company of Limited Liability Company “Autocomponent-Group GAZ”. Accordingly, Mr. Deripaska, Ms. Gulzhan Moldazhanova and Ms. Olga Mashkovskaya did not vote on the Board resolution approving the Addendum to the Raw Materials Supply Contract.

LISTING RULES IMPLICATIONS

Limited Liability Company “Autocomponent-Group GAZ” is held by Basic Element as to more than 30% of the issued share capital. Basic Element is in turn held by Mr. Deripaska (an executive Director) as to more than 50% of the issued share capital. Limited Liability Company “Autocomponent-Group GAZ” is therefore an associate of Mr. Deripaska and is thus a connected person of the Company.

Accordingly, the transactions contemplated under the Addendum to the Raw Materials Supply Contract constitute continuing connected transactions of the Company.

The estimated annual aggregate transaction amount of the continuing connected transactions under the Addendum to the Raw Materials Supply Contract and the Previously Disclosed Raw Materials Supply Contracts for the financial year ending 31 December 2017 is more than 0.1% but less than 5% under the applicable percentage ratios. Accordingly, pursuant to Rule 14A.76 of the Listing Rules, the transactions contemplated under these contracts are only subject to the announcement requirements set out in Rules 14A.35 and 14A.68, the annual review requirements set out in Rules 14A.49, 14A.55 to 14A.59, 14A.71 and 14A.72 and the requirements set out in Rules 14A.34 and 14A.50 to 14A.54 of the Listing Rules. These transactions are exempt from the circular and shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Details of the Addendum to the Raw Materials Supply Contract and the Previously Disclosed Raw Materials Supply Contracts will be included in the relevant annual report and accounts of the Company in accordance with Rule 14A.71 of the Listing Rules where appropriate.

PRINCIPAL BUSINESS ACTIVITIES

The Company is principally engaged in the production and sale of aluminium, including alloys and value-added products, and alumina.

Limited Liability Company “Autocomponent-Group GAZ” is principally engaged in production and sales of auto components.

DEFINITIONS

In this announcement, the following expressions have the following meanings, unless the context otherwise requires:

“associate(s)”     has the same meaning ascribed thereto under the Listing Rules.
“Basic Element” Basic Element Limited, a company incorporated in Jersey.
“Board” the board of Directors.
“Company” United Company RUSAL Plc, a limited liability company incorporated in Jersey, the shares of which are listed on the main board of the Stock Exchange.
“connected person(s)” has the same meaning ascribed thereto under the Listing Rules.
“continuing connected transactions” has the same meaning ascribed thereto under the Listing Rules.
“Director(s)” the director(s) of the Company.
“En+” En+ Group Limited, a company incorporated in Jersey, a substantial shareholder of the Company.
“Group” the Company and its subsidiaries.
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange.
“Mr. Deripaska” Mr. Oleg Deripaska, an executive Director.
“percentage ratios” the percentage ratios under Rule 14.07 of the Listing Rules.
“Previously Disclosed Raw Materials Supply Contracts” the raw materials supply contracts entered into between members of the Group and the associates of Mr. Deripaska/En+, pursuant to which members of the Group agreed to sell raw materials to associates of Mr. Deripaska/En+ in 2017, as disclosed in the announcements of the Company dated 23 December 2014, 30 December 2016 and 28 February 2017.
“Stock Exchange” The Stock Exchange of Hong Kong Limited.
“substantial shareholder” has the same meaning ascribed thereto under the Listing Rules.
“USD” United States dollars, the lawful currency of the United States of America.
“VAT” value added tax.

By Order of the Board of Directors of
United Company RUSAL Plc
Aby Wong Po Ying
Company Secretary

10 March 2017

As at the date of this announcement, the executive Directors are Mr. Oleg Deripaska, Mr. Vladislav Soloviev and Mr. Siegfried Wolf, the non-executive Directors are Mr. Maxim Sokov, Mr. Dmitry Afanasiev, Mr. Ivan Glasenberg, Mr. Maksim Goldman, Ms. Gulzhan Moldazhanova, Mr. Daniel Lesin Wolfe, Ms. Olga Mashkovskaya, Ms. Ekaterina Nikitina and Mr. Marco Musetti, and the independent non-executive Directors are Mr. Matthias Warnig (Chairman), Mr. Philip Lader, Dr. Elsie Leung Oi-sie, Mr. Mark Garber, Mr. Dmitry Vasiliev and Mr. Bernard Zonneveld.

All announcements and press releases published by the Company are available on its website under the links http://www.rusal.ru/en/investors/info.aspx, http://rusal.ru/investors/info/moex/ and http://www.rusal.ru/en/press-center/press-releases.aspx, respectively.

Contacts

United Company RUSAL Plc

Contacts

United Company RUSAL Plc