Short explanatory note to the announced information about additional share issue by the JSC Uzbek Metallurgical Plant (RSE: UZMK)
Joint Stock Company Uzbek Metallurgical Plant (RSE: UZMK), a leading manufacturer of iron and steel products in Uzbekistan, announces the decision of the Supervisory Board to additionally issue 177 626 648 ordinary and 141 577 773 preferred registered uncertificated shares and the registration of a respective Decision (hereinafter referred to as the "Decision").
The text of the Decision is available on the company's website https://www.uzbeksteel.uz/ , with all relevant essential information published on the www.openinfo.uz , the website of the Tashkent Stock Exchange (www.uzse.uz ), as well as on the company's website (https://www.uzbeksteel.uz/).
Tatyana Budey, CFO of JSC UZMK, commented the decision: “The Supervisory Board's decision to issue additional shares allows the company to strengthen its balance sheet in anticipation of a subsequent public offering (FPO). UZMK’s development program is well underway and requires new funding to achieve our goal of doubling the company's production capacity and meeting Uzbekistan's growing demand for iron and steel products”.
Main excerpts from the Decision: The text of the Decision is available on the company's website https://www.uzbeksteel.uz/ , with all relevant essential information published on the www.openinfo.uz , the website of the Tashkent Stock Exchange (www.uzse.uz ), as well as on the company's website (https://www.uzbeksteel.uz/).
Tatyana Budey, CFO of JSC UZMK, commented the decision: “The Supervisory Board's decision to issue additional shares allows the company to strengthen its balance sheet in anticipation of a subsequent public offering (FPO). UZMK’s development program is well underway and requires new funding to achieve our goal of doubling the company's production capacity and meeting Uzbekistan's growing demand for iron and steel products”.
- The Supervisory Board of UZMK, during its meeting dated March 16th, 2023 decided (a) to issue additional ordinary and preferred shares in amount of 177 626 648 and 141 577 773 respectively, and (b) to approve the Decision corresponding to this additional share issue;
- The Ministry of Economy and Finance of the Republic of Uzbekistan has registered the decision on the additional share issue on May 5th, 2023;
- According to this decision, all shareholders holding ordinary shares will be granted pre-emptive rights to purchase shares in the issue in proportion to the number of shares they held as of the date of the decision – March 16th, 2023. The details of the process will be disclosed in a special announcement in accordance with the local legislation;
- The issue price is fixed as of March 3rd, 2023 when the information about planned meeting of the Supervisory Board was disclosed (announcement day closing price) and comprises of UZS8,959 per ordinary and UZS2,820 per preferred shares of UZMK respectively;
- The share issue facilitates financing of the investment program of UZMK aimed atdoubling of its’ installed capacity;
- The main investor, according to the Decision, will be the Uzbekistan Fund for Reconstruction and Development ("UFRD") which is the country’s largest sovereign fund. As part of previous decisions of the Government of the Republic of Uzbekistan, the UFRD was instructed to allocate EUR140 million to finance the development program of the company with the subsequent conversion of this amount into UZMK shares. This funding was made available to the company during 2H 2021 and is recorded as part of accounts payable on the balance sheet of the company;
- The UFRD is expected to acquire the full amount of issued preferred shares as well as part of the ordinary shares. Following the placement, the UFRD's stake in the company's total capital may amount to over 35%, including over 18% for the common shares. Thus, after the placement, the government's stake (represented by the Agency for Strategic Reforms and UFRD) is expected to amount to over 88% of ordinary shares and over 93% of preferred shares (note that ordinary shares account for about 80% of the company's total capital);
- In order to prevent a reduction in the free float ahead of the public offering (FPO) of UZMK, based on shareholder requests, a decision was made to engage a large local institutional investor, Abu Dhabi Uzbek Investments Company (ADUI), who was granted the right to purchase the remaining shares of the issue after the preemption rights by minority shareholders and allocation of shares in favor of the UFRD were satisfied;
- The financial impact of the new share issue will be limited to raising additional capital from investors other than the UFRD, as EUR140 million of funds from the UFRD have already been received by the company and will be transferred from accounts payable to share capital upon closing of the transaction; additional amount raised from other investors will be used to UZMK investment program.
Note:
JSC Uzmetkombinat (JSC UZMK) is the leader of ferrous metallurgy in Uzbekistan, counting its history from 1944. Its manufacturing plant has an installed annual capacity of more than 1 million tons of rolled products and is implementing a large-scale investment program to increase capacity to 2.5 million tons per year during 2021-2025. The enterprise employs more than 12,000 people. Its products are sold in all regions of the country and are exported to various countries of the world, including Europe. More than 80% of the company's shares are owned by the Uzbekistan state. A significant portion of the company’s shares is traded on RSE "Toshkent". Common and preferred shares of the company have the status of highly liquid, and the market capitalization of the company is around UZS 4 trillion (approx. USD 350 million).
Additional inquiries should be addressed to :
Timur Sharifullin – t.sharifullin@uzbeksteel.uz
Disclaimer
This financial release contains forward‐looking statements that reflect the current views of JSC Uzmetkombinat management regarding future events. They are generally denoted by the words "expect", "anticipate", "intend", "estimate", "aspire", "plan", "will", "forecast" and comparable expressions, and usually contain information that refers to expectations or goals regarding economic conditions, sales revenue, or other criteria for the success of an enterprise. Forward‐looking statements are based on current plans, estimates and expectations within the current legal and regulatory environment and are therefore only valid as of the date indicated. Therefore, such statements should be considered with caution. Such statements are subject to numerous risks and uncertainties (such as those described in publications), most of which are difficult to estimate and are generally beyond the control of JSC Uzmetkombinat. Relevant factors include the consequences of prudent strategic and operational initiatives, including the acquisition or disposal of companies (interests in them) or other assets. If certain risks and uncertainties arise, or if the assumptions on which the statements are based prove incorrect, the actual results of JSC Uzmetkombinat may differ materially from those expressed or implied in these statements. Uzmetkombinat JSC cannot give any guarantee that expectations or goals will be achieved. Uzmetkombinat JSC, despite existing legal obligations, disclaims any responsibility for updating forward‐looking statements to reflect new information or future events or other conditions or circumstances. In addition to key figures prepared in accordance with IFRS and NSBU, respectively, JSC Uzmetkombinat presents key non‐GAAP measures such as EBITDA, EBIT, net debt and net financial liabilities that are not a component of accounting rules. These key figures should be considered as a supplement to, but not as a substitute for, data prepared in accordance with IFRS. Non‐GAAP key figures are not subject to IFRS or any other generally applicable accounting rules. When evaluating the net assets, financial position and performance of JSC Uzmetkombinat, these additional indicators should not be used in isolation or as an alternative to key indicators presented in the consolidated financial statements and calculated in accordance with relevant accounting principles.
Rounding differences can occur in relation to percentages and figures.
Additional inquiries should be addressed to :
Timur Sharifullin – t.sharifullin@uzbeksteel.uz
Disclaimer
This financial release contains forward‐looking statements that reflect the current views of JSC Uzmetkombinat management regarding future events. They are generally denoted by the words "expect", "anticipate", "intend", "estimate", "aspire", "plan", "will", "forecast" and comparable expressions, and usually contain information that refers to expectations or goals regarding economic conditions, sales revenue, or other criteria for the success of an enterprise. Forward‐looking statements are based on current plans, estimates and expectations within the current legal and regulatory environment and are therefore only valid as of the date indicated. Therefore, such statements should be considered with caution. Such statements are subject to numerous risks and uncertainties (such as those described in publications), most of which are difficult to estimate and are generally beyond the control of JSC Uzmetkombinat. Relevant factors include the consequences of prudent strategic and operational initiatives, including the acquisition or disposal of companies (interests in them) or other assets. If certain risks and uncertainties arise, or if the assumptions on which the statements are based prove incorrect, the actual results of JSC Uzmetkombinat may differ materially from those expressed or implied in these statements. Uzmetkombinat JSC cannot give any guarantee that expectations or goals will be achieved. Uzmetkombinat JSC, despite existing legal obligations, disclaims any responsibility for updating forward‐looking statements to reflect new information or future events or other conditions or circumstances. In addition to key figures prepared in accordance with IFRS and NSBU, respectively, JSC Uzmetkombinat presents key non‐GAAP measures such as EBITDA, EBIT, net debt and net financial liabilities that are not a component of accounting rules. These key figures should be considered as a supplement to, but not as a substitute for, data prepared in accordance with IFRS. Non‐GAAP key figures are not subject to IFRS or any other generally applicable accounting rules. When evaluating the net assets, financial position and performance of JSC Uzmetkombinat, these additional indicators should not be used in isolation or as an alternative to key indicators presented in the consolidated financial statements and calculated in accordance with relevant accounting principles.
Rounding differences can occur in relation to percentages and figures.
