United Company RUSAL Plc: Continuing Connected Transactions Repair Services and Transportation Contract

HONG KONG--()--Regulatory News:

United Company RUSAL Plc (Paris:RUSAL) (Paris:RUAL):

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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

CONTINUING CONNECTED TRANSACTIONS
REPAIR SERVICES AND
TRANSPORTATION CONTRACT

Reference is made to the announcements of the Company dated 2 July 2015, 24 January 2017, 2 February 2017, 28 February 2017, 19 April 2017, 25 April 2017 and 23 May 2017 in relation to the Previously Disclosed Repair Services Contracts; and the announcements of the Company dated 14 January 2015, 29 December 2015, 20 January 2016, 5 July 2016, 30 December 2016, 16 January 2017 and 28 February 2017 in relation to the Previously Disclosed Transportation Contracts.

The Company announces that on 6 July 2017, a member of the Group entered into an additional agreement with an associate of En+, pursuant to which the associate of En+ agreed to provide repair services to the member of the Group.

The Company further announces that on 6 July 2017, a member of the Group entered into an additional agreement with an associate of En+, pursuant to which the associate of En+ agreed to provide transportation services to the member of the Group.

REPAIR SERVICES

THE NEW REPAIR SERVICES CONTRACT

Reference is made to the announcements of the Company dated 2 July 2015, 24 January 2017, 2 February 2017, 28 February 2017, 19 April 2017, 25 April 2017 and 23 May 2017 in relation to the Previously Disclosed Repair Services Contracts.

The Company announces that on 6 July 2017, a member of the Group entered into an additional agreement with an associate of En+, pursuant to which the associate of En+ agreed to provide repair services to the member of the Group (the “New Repair Services Contract”), details of which are set out below.

Date of the additional agreement  

Customer
(member of
the Group)

 

Contractor
(associate of
En+)

 

Term of
contract

 

Repair
services

 

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

 

Payment
terms

 

Additional agreement dated 6 July 2017 to the
original contract dated 10 January 2017

Limited
Liability
Company
“Russian
Engineering
Company”

Joint-Stock
Company
“Irkutskenergoremont”

Up to 31
December
2017

Production
equipment
maintenance
and repair
works

61,539

Payment
within 30
calendar days
of signature
by the
customer of
the performed
works
certificate
based on
an invoice

Total estimated consideration payable for the
year 2017

61,539

The consideration under the New Repair Services Contract is to be paid in cash via wire transfer or set-off of counter obligations.

THE ANNUAL AGGREGATE TRANSACTION AMOUNT

The contract price payable under the New Repair Services Contract has been determined with reference to the market price and on terms no less favourable than those prevailing in the Russian market for repair services of the same type and quality and those offered by the associates of En+ to independent third parties. The basis of calculation of payments under the New Repair Services Contract is the price of contract offered by the associate of En+ which is based on the estimated costs (including labour costs and the necessary materials) for the relevant repair works. The Company invited several organizations to take part in the tender in relation to the required repair services and chose the contractor offering the best terms and conditions (taking into account the price and availability of professionals with the required skill and experience) and then entered into the additional agreement with the chosen contractor.

Based on the terms of the New Repair Services Contract and the Previously Disclosed Repair Services Contracts, the annual aggregate transaction amount that is payable by the Group to the associates of En+ for the financial year ending 31 December 2017 is estimated to be approximately USD13.088 million.

The annual aggregate transaction amount is estimated by the Directors based on the amount of repair services to be received and the contract price.

THE AGGREGATION APPROACH

Pursuant to Rule 14A.81 of the Listing Rules, the continuing connected transactions contemplated under the New Repair Services Contract and the Previously Disclosed Repair Services Contracts should be aggregated, as they were entered into by the Group with the associates of the same group of connected persons who are parties connected or otherwise associated with one another, and the subject matter of each of the contracts relates to the receipt of repair and maintenance services by members of the Group.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The Directors consider that the New Repair Services Contract is for the benefit of the Company, as the contractor offered a competitive price.

The Directors (including the independent non-executive Directors) consider that the New Repair Services Contract has been negotiated on an arm’s length basis and on normal commercial terms which are fair and reasonable and the transactions contemplated under the New Repair Services 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 New Repair Services Contract, save for Mr. Deripaska, Mr. Maxim Sokov, Ms. Olga Mashkovskaya and Ms. Gulzhan Moldazhanova, who are directors of En+, being the holding company of Joint-Stock Company “Irkutskenergoremont”. Mr. Deripaska is also indirectly interested in more than 50% of the issued share capital of En+. Accordingly, Mr. Deripaska, Mr. Maxim Sokov, Ms. Olga Mashkovskaya and Ms. Gulzhan Moldazhanova did not vote on the Board resolution approving the New Repair Services Contract.

LISTING RULES IMPLICATIONS

Joint-Stock Company “Irkutskenergoremont” is held by En+ as to more than 30% of the issued share capital and is therefore an associate of En+ which is a substantial shareholder of the Company and thus is a connected person of the Company under the Listing Rules.

The estimated annual aggregate transaction amount of the continuing connected transactions under the New Repair Services Contract and the Previously Disclosed Repair Services 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 the independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Details of the New Repair Services Contract and the Previously Disclosed Repair Services Contracts will be included in the next annual report and accounts of the Company in accordance with Rule 14A.71 of the Listing Rules where appropriate.

TRANSPORTATION CONTRACT

THE NEW TRANSPORTATION CONTRACT

Reference is made to the announcements of the Company dated 14 January 2015, 29 December 2015, 20 January 2016, 5 July 2016, 30 December 2016, 16 January 2017 and 28 February 2017 in relation to the Previously Disclosed Transportation Contracts.

The Company announces that on 6 July 2017, a member of the Group entered into an additional agreement with an associate of En+, pursuant to which the associate of En+ agreed to provide transportation services to the member of the Group (the “New Transportation Contract”) with major terms set out below:

Date of contract  

Customer
(member of
the Group)

 

Service
provider
(associate of
En+)

 

Transportation
services

 

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

 

Scheduled
termination
date

 

Payment
terms

 

Additional agreement dated 6 July 2017 to the
contract dated 13 January 2017

LLC
“Engineering
Construction
Company”

KraMZ-Auto

Transportation
services

388 (Note 1)

31 December
2017

Payment to
be made in
two equal
installations
of 50% of the
total amount,
the first
installment
before the
15th of the
month
following the
report month,
and the
second
installment
before the
30th of the
month
following the
report month

Total estimated consideration payable for the
year

388

Note:

1. The service fee is calculated by the demand for transportation services and the type of vehicle engaged, the quantity of vehicle-hours and vehicle-hour cost (which ranges from USD4 to USD91 depending on vehicle type).

The consideration under the New Transportation Contract is to be paid in cash via wire transfer or by way of bilateral clearing.

THE ANNUAL AGGREGATE TRANSACTION AMOUNT

Pursuant to Rule 14A.81 of the Listing Rules, the continuing connected transactions contemplated under the New Transportation Contract and the Previously Disclosed Transportation Contracts should be aggregated for the financial year ending 31 December 2017, as they were entered into by members of the Group with the associates of En+, and the subject matter of each contract relates to the provision of transportation services by the associates of En+ to the Group.

The annual aggregate transaction amounts that are payable by the Group to the associates of En+ under the New Transportation Contract and the Previously Disclosed Transportation Contracts for the financial year ending 31 December 2017 are estimated to be approximately USD22.118 million.

The Company invited several organizations to take part in the tender in relation to the required transportation services and chose the contractor offering the best terms and conditions (taking into account the price and available routes) and then entered into the contract with the chosen service provider.

The contract price under the New Transportation 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 transportation services of the same type and quality and those offered by the associates of En+ to independent third parties. The annual aggregate transaction amount is derived from the total contract price under the New Transportation Contract, which was based on the need of transportation services by the Group for the relevant year.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The New Transportation Contract was entered into for the purpose of transporting goods, cargoes and/or passenger forwarding of the Group. The Company considers that the transactions contemplated under the New Transportation Contract are for the benefit of the Company, as the services provided are required in the production process of the Group and the service providers offered a competitive price and is capable of meeting the Group’s transportation needs.

The Directors (including the independent non-executive Directors) consider that the New Transportation Contract is on normal commercial terms which are fair and reasonable and the transactions contemplated under the New Transportation 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 New Transportation Contract, save for Mr. Deripaska, Mr. Maxim Sokov, Ms. Olga Mashkovskaya and Ms. Gulzhan Moldazhanova, who are directors of En+, being the holding company of KraMZ-Auto. Mr. Deripaska is also indirectly interested in more than 50% of the issued share capital of En+. Accordingly, Mr. Deripaska, Mr. Maxim Sokov, Ms. Olga Mashkovskaya and Ms. Gulzhan Moldazhanova did not vote on the Board resolution approving the New Transportation Contract.

LISTING RULES IMPLICATIONS

KraMZ-Auto is an indirect subsidiary of En+, and is therefore an associate of En+ which is a substantial shareholder of the Company. Accordingly, KraMZ-Auto is a connected person of the Company under the Listing Rules.

Accordingly, the transactions contemplated under the New Transportation Contract constitute continuing connected transactions of the Company.

The estimated annual aggregate transaction amount of the continuing connected transactions under the New Transportation Contract and the Previously Disclosed Transportation Contracts for the financial years 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 New Transportation Contract 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.

Joint-Stock Company “Irkutskenergoremont” is principally engaged in activities for supporting of operability of thermal power plants.

Limited Liability Company “KraMZ-Auto” is principally engaged in the provision of transportation services.

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.

“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 of
Hong Kong Limited.

“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 of Hong Kong Limited.

“Mr. Deripaska” Mr. Oleg Deripaska, an executive Director.
“percentage ratios”

the percentage ratios under Rule 14.07 of the Listing
Rules.

“Previously Disclosed Repair Services
Contracts”

the repair services contracts between members of the
Group and associates of En+, pursuant to which the
associates of En+ agreed to provide repair services to
members of the Group during the year 2017, as
disclosed in the announcements of the Company dated
2 July 2015, 24 January 2017, 2 February 2017, 28
February 2017, 19 April 2017, 25 April 2017 and 23
May 2017.

“Previously Disclosed Transportation
Contracts”

the series of transportation contracts between
members of the Group and the associates of En+,
pursuant to which the associates of En+ agreed to
provide transportation services to members of the
Group during the year ending 31 December 2017, as
disclosed in the announcements of the Company dated
14 January 2015, 29 December 2015, 20 January
2016, 5 July 2016, 30 December 2016, 16 January
2017 and 28 February 2017.

“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

7 July 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/hkse/, 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