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An offer document, set to contain the full terms and conditions of the increased offer and the procedures for acceptance of the increased offer, will be provided to KAZ Minerals’ shareholders on February 8, the document added.
‘Material undervaluation’
KAZ Minerals' fifth biggest investor, RWC Partners, which holds just under 3.3% of the company’s shares, reacted to the increased offer on February 4 with the statement that the new offer still “materially undervalues” the company.
“As we forecast that KAZ Minerals will generate more than $5.5bn of ebitda over the next three years, it is our opinion that the £7.80 per share offer price still materially undervalues the company,” RWC said. “Therefore, based on current circumstances, we do not believe this latest offer price represents good value for minority shareholders.” RWC said that a bid of £10 a share would be more acceptable to minority shareholders.
KAZ Minerals shares closed at £7.73 on February 3 and opened at £10 on the morning of February 4.
It appears most shareholders would be quite happy to hang on to the stock, as copper prices have risen sharply in recent months with industry anticipating a return to normal as the coronavirus crisis fades, quite apart from appealing long-term trends expected in copper prices.
Copper prices rose from a low of $4,775 per tonne at the end of last March to end the year at $7,894 in December, and continued growing at the start of this year. They increased by another 4% from January 1 to top the $8,000 mark in the first week of January.
Further increases in the price of copper may force Nova Resources to boost its offer even higher than £10, which could potentially harm the viability of the deal for the consortium.
Rationale for the offer
Novachuk explained in October that the rationale for the offer stemmed from the company’s “higher risk, capital intensive strategy”, which may be “misaligned with the preference of many investors in the mining sector”. Nova Resources said separately that the development of the Baimskaya copper mine in Russia, bought by KAZ Minerals in 2018, “would be best undertaken away from public markets as a private company”.
The $900mn purchase of the undeveloped Baimskaya mine surprised shareholders, leading to a sell-off in the stock after the announcement of the purchase. The mine’s development is set to cost $7bn, while it is thought it will take seven years to carry out. KAZ Minerals has referred to the mine as one of the world’s biggest undeveloped copper assets.
Foreign investors return to Ukraine’s domestic bond market, approaching peak 2019 levels
bne IntelliNews
With Ukraine’s $5bn stand-by agreement (SBA) with
the International Monetary Fund (IMF) in limbo, the Ministry of Finance has turned to the domestic bond mar- ket to build up reserves ahead of a year of heavy debt redemptions.
Yields on local hryvnia debt have been hiked to between 10% and 12% to entice investors back into the market after a sell- off in 2020, due to multiple shocks. And foreign purchases
of Ukrainian government bonds are returning to their peak levels of late 2019, reports Dragon Capital.
Over the last month, foreign purchases totalled $526mn, “close to peak monthly inflows of $560-610m in September and December 2019,” Dragon wrote as cited by UBN.
“Recent appreciation pressure on the hryvnia (+1.4% w/w) is likely to support interest in local bonds. We expect yields on medium-term hryvnia debt to remain close to current levels in the coming months unless an upsurge in foreign demand drives them lower.”
The government is due to pay off some $16bn of debt this year, with a peak payment of $11bn in September. Economist worry that without a working IMF programme the government will not be able to meet its obligations.
Ukraine domestic bond market issues UAH mn
Source: MinFin
www.bne.eu
Total bond issues UAH mn
Share non-residents holding %