Steel and mining group Evraz has completed a review of the feasibility of demerging its metallurgical coal assets and on Wednesday announced it would separately list the coal assets under Raspadskaya (RASP).
The demerger, Evraz said in a statement, would allow each separate business to pursue tailored strategic, capital allocation and sustainability objectives.
Evraz would continue to focus on steel, iron-ore and vanadium, while RASP would be a producer of high-quality metallurgical coal.
"Following this transaction, Raspadskaya will strengthen its position as the largest coking coal producer in Russia and as a leading player globally, with vast and high-quality coal reserves and resources. In addition, the demerger will allow Raspadskaya to focus on its own growth strategy and sustainable development,” said RASP chairperson Alexander Frolov.
RASP currently provides about 70% of Evraz’s metallurgical coal supply requirements needed to support its operations. To aid the transition, certain trading arrangements, including two new, long-term coal offtake agreements would continue to the end of 2026.
East Metals, the trading subsidiary of the Evraz, would continue to re-sell coal purchased from the RASP for up to 15 months following the demerger.
To effect the merger, Evraz would make an interim in specie distribution of the shares it directly holds in RASP, which is listed on the Moscow Exchange, to shareholders. If the demerger proceeds, Evraz shareholders would receive an entitlement to 0.4255477880 of a RASP share for each Evraz share held.
Evraz stated that it did not have sufficient distributable reserves to make the in specie distribution of all of its RASP shares to effect the demerger. As an interim step, the board proposed to capitalise the sum of $8.2-billion currently standing to the credit of Evraz’s profit and loss reserve by way of issuing certain capital reduction shares, and subsequently to reduce the company's share capital by cancelling the capital reduction shares, so as to create sufficient distributable reserves to effect the demerger.