United Company Rusal PLC: Continuing Connected Transactions Transport Logistics Services Contract, Purchase of Assets and Repair Service

13-Nov-2017 Intellasia | BusinessWire | 7:05 AM Print This Post

HONG KONG–(BUSINESS WIRE)–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
TRANSPORT LOGISTICS
SERVICES CONTRACT,

PURCHASE OF ASSETS AND
REPAIR
SERVICES

Reference is made to the announcements of the Company dated 30
December 2016, 16 January 2017, 2 March 2017, 8 March 2017, 12 April
2017, 1 June 2017, 21 June 2017 and 4 July 2017 in relation to the
Previously Disclosed Transport Logistics Services Contracts; the
announcements of the Company dated 17 June 2016, 29 November 2016,
30 December 2016, 20 July 2017, 12 September 2017 and 30 October
2017 in relation to the Previously Disclosed Purchase of Assets
Contracts; and the announcements of the Company dated 2 July 2015,
24 January 2017, 2 February 2017, 28 February 2017, 19 April 2017,
25 April 2017, 23 May 2017, 7 July 2017, 12 September 2017, 4
October 2017 and 30 October 2017 in relation to the Previously
Disclosed Repair Services Contracts.
 
The Company announces that a member of the Group and an associate of
En+ entered into a contract pursuant to which the associate of En+
agreed to provide transport logistics services to the member of the
Group.
 
The Company further announces that members of the Group and
associates of Mr. Deripaska entered into contracts, pursuant to
which the associates of Mr. Deripaska agreed to sell assets to the
members of the Group.
 
The Company further announces that a member of the Group entered
into a contract 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 TRANSPORT LOGISTICS SERVICES CONTRACT

Reference is made to the announcements of the Company dated 30 December
2016, 16 January 2017, 2 March 2017, 8 March 2017, 12 April 2017, 1 June
2017, 21 June 2017 and 4 July 2017 in relation to the Previously
Disclosed Transport Logistics Services Contracts.

The Company announces that a member of the Group and an associate of En+
entered into a contract pursuant to which the associate of En+ agreed to
provide transport logistics services to the member of the Group (the “New
Transport Logistics Services Contract
”) with major terms set out
below:

No.      

Date of contract

     

Customer
(member of the
Group)

     

Service
provider
(associate of
En+)

      Services      

Estimated
consideration
payable for the
year
ending 31

December 2017
and 31 December
2018
excluding

VAT

     

Term of
contract

     

Payment
terms

(USD)
 
1 10 November 2017 RTI Limited

“Russian
Transport
Company” LLC

Forwarding
services

2017: 10,464,264
2018: 10,464,264

From 1
October 2017
to 31 March
2018

Payment to be
made within 5
days from the
date of
drawing
of the
account

Total estimated consideration
payable for the year

2017: 10,464,264
2018: 10,464,264

 

The consideration under the New Transport Logistics Services Contract is
to be paid in cash via bank transfer.

THE ANNUAL AGGREGATE TRANSACTION AMOUNT

The contract price payable under the New Transport Logistics 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
transport logistics services of the same type and quality and those
offered by the associates of En+ to independent third parties. In
accordance with the Company’s procurement policies and using tools such
as the Company’s procurement portal, the Company invited several
organizations to take part in the tender in relation to the required
transport logistics services. The Company’s procurement managers, in
line with the best-in-class experience and know-how of the Company’s
procurement policies, with approval from the Company’s bidding committee
chose the service provider offering the best terms and conditions (the
chosen service provider offered competitive rates with rolling stock
guarantee and was able to provide the services required). The basis of
calculation of payment under the contract is the price for
transportation of a container multiplied by the estimated number of
containers required for each of the year ending 31 December 2017 and the
year ending 31 December 2018 (i.e. approximately 12,830 containers for
each of the years 2017 and 2018 respectively).

Pursuant to Rule 14A.81 of the Listing Rules, the New Transport
Logistics Services Contract is required to be aggregated with the
Previously Disclosed Transport Logistics Services Contracts as they were
each entered into by the Group with the associates of En+ and the
subject matter of each contract relates to the provision of transport
logistics services by the associates of En+ to the Group.

The annual aggregate transaction amount that is payable by the Group to
the associates of En+ under the New Transport Logistics Services
Contract and the Previously Disclosed Transport Logistics Services
Contracts for the financial year ending 31 December 2017 is estimated to
be up to approximately USD23.99 million and for the financial year
ending 31 December 2018 is estimated to be up to approximately USD10.47
million. This annual aggregate transaction amount is estimated by the
Directors based on the need for the transport logistics services by the
Group and the contract price.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The New Transport Logistics Services Contract was entered into for the
purpose of obtaining logistics services. The Company considers that the
transactions contemplated under the New Transport Logistics Services
Contract are for the benefit of the Company as the services provided are
required in the production process of the Group.

The Directors (including the independent non-executive Directors)
consider that the New Transport Logistics Services Contract is on normal
commercial terms which are fair and reasonable and the transactions
contemplated under the New Transport Logistics 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 Transport Logistics 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 “Russian Transport Company” LLC. 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 Transport Logistics Services Contract.

LISTING RULES IMPLICATIONS

“Russian Transport Company” LLC is an indirect subsidiary of En+ and is
therefore an associate of En+ which is a substantial shareholder of the
Company. Therefore “Russian Transport Company” LLC 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 Transport Logistic Services
Contract and the Previously Disclosed Transport Logistics 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 shareholders’ approval requirements under Chapter 14A of
the Listing Rules.

Details of the New Transport Logistic Services 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.

PURCHASE OF ASSETS

THE NEW PURCHASE OF ASSETS CONTRACTS

Reference is made to the announcements of the Company dated 17 June
2016, 29 November 2016, 30 December 2016, 20 July 2017, 12 September
2017 and 30 October 2017 in relation to the Previously Disclosed
Purchase of Assets Contracts.

The Company announces that the following contracts were entered into
between members of the Group, as buyer, and associates of En+, as
seller, pursuant to which the associates of Mr. Deripaska agreed to sell
assets to the members of the Group (the “New Purchase of Assets
Contracts
”) with major terms set out below:

No.      

Date of
contract

     

Buyer (member
of the Group)

     

Seller
(associate of
Mr.
Deripaska)

     

Subject
matter

     

Estimated
consideration
payable for the
year
ending 31

December
2017,
excluding
VAT

     

Scheduled
termination
date

 

      Payment terms
(USD)
 
 
1

10 November
2017

JSC «SUAL»

“Automobile
plant
“URAL” JSC

3 dump
trucks

222,947

31
December
2018

10% of the
consideration as
advance payment to be
paid
5 days after the
date of signing of the
contract , the
remaining
90% of the
consideration to be
paid after
receiving the
notification regarding
readiness of goods
for
shipping

 
2 10 November 2017

JSC «Boksit
Timana»

“Automobile
plant
“URAL” JSC

3 dump trucks 222,947

31
December
2018

10% of the
consideration as
advance payment to be
paid
5 days after the
date of signing of the
contract, the
remaining
90% of the
consideration to be
paid after
receiving the
notification regarding
readiness of goods
for
shipping

Total estimated
consideration
payable
for the

year:

445,894
 

The consideration under the New Purchase of Assets Contracts is to be
paid in cash via wire transfer.

THE ANNUAL AGGREGATE TRANSACTION AMOUNT

Pursuant to Rule 14A.81 of the Listing Rules, the continuing connected
transaction contemplated under the New Purchase of Assets Contracts and
the Previously Disclosed Purchase of Assets Contracts should be
aggregated, as they were entered into by members of the Group with the
associates of Mr. Deripaska and En+, and the subject matter of each
contract relates to the purchase of assets from the associates of Mr.
Deripaska and En+ by the Group for the year ending 31 December 2017.

The annual aggregate transaction amounts that are payable by the Group
to the associates of Mr. Deripaska and En+ under the New Purchase of
Assets Contracts and the Previously Disclosed Purchase of Assets
Contracts for the financial year ending 31 December 2017 is estimated to
be approximately USD9.210 million.

In accordance with the Company’s procurement policies and using tools
such as the Company’s procurement portal, the Company invited several
organizations to take part in the tender in relation to the purchase of
assets. The Company’s procurement managers, in line with the
best-in-class experience and know-how of the Company’s procurement
policies, with approval from the Company’s bidding committee, chose the
contractor as it offered the lowest price for the asset to be purchased,
the best payment condition and the assets supplied conformed with the
technical requirements.

The contract price under the New Purchase of Assets Contracts have 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 assets of the same type and quality and those offered
by the associates of En+/Mr. Deripaska to independent third parties. The
basis of calculation of payments under the New Purchase of Assets
Contracts is based on the quotation provided by the supplier based on
costs relating to production. The basis of calculation of payments under
the New Purchase of Assets Contracts is as follows:

Contract no.       Basis of calculation
 
1 USD222,947 based on terms DDP Kamensk-Uralskiy
 
2 USD222,947 based on terms DDP Chinyavoryk
 

The annual aggregate transaction amount is derived from the total
contract price under the New Purchase of Assets Contracts, which was
based on the amount of assets to be supplied and the respective contract
price.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The New Purchase of Assets Contracts were entered into for the purpose
of purchasing the assets. The Company considers that the transactions
contemplated under the New Purchase of Assets Contracts are for the
benefit of the Company, as the sellers offered the assets to the Group
at the lowest price and the quality of the assets satisfies the
requirement of the Group.

The Directors (including the independent non-executive Directors)
consider that the New Purchase of Assets Contracts are on normal
commercial terms which are fair and reasonable and the transactions
contemplated under the New Purchase of Assets Contracts 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 Purchase of Assets Contracts, 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 interested in the issued share
capital of “Automobile plant “URAL” JSC as to more than 30%.
Accordingly, Mr. Deripaska, Ms. Gulzhan Moldazhanova and Ms. Olga
Mashkovskaya did not vote on the Board resolutions approving the New
Purchase of Assets Contracts.

LISTING RULES IMPLICATIONS

“Automobile plant “URAL” JSC is held by Basic Element as to more than
30% of the issued share capital. Basic Element is in turn held by Mr.
Deripaska as to more than 50% of the issued share capital. “Automobile
plant “URAL” JSC is therefore an associate of Mr. Deripaska and is thus
a connected person of the Company.

The estimated annual aggregate transaction amount of the continuing
connected transactions under the New Purchase of Assets Contracts and
the Previously Disclosed Purchase of Assets 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 New Purchase of Assets Contracts and the Previously
Disclosed Purchase of Assets 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.

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, 23 May 2017, 7 July 2017, 12 September 2017, 4 October 2017
and 30 October 2017 in relation to the Previously Disclosed Repair
Services Contracts.

The Company announces that a member of the Group entered into contracts
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
contract

     

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

      Payment terms
(USD)
 

Contract dated 10
November 2017

JSC “RUSAL
Achinsk”

JSC “Bratskenergoremont”

Up to 31
December 2017,
can be extended
for the next
calendar
year by
an addendum to
be entered into
by both
parties

Services for the
execution of
power work and
service
maintenance
of
equipment at
CHPP of JSC
“RUSAL
Achinsk”

452,308
(Note 1)

A prepayment of
50% of the
consideration to
be paid
before
the 5th of the
month, the
payment of the
remaining
50%
to be paid within
10 calendar days
after
receipt of
the invoice

 

Total estimated
consideration
payable
for the

year 2017

452,308
Note:
1.   The consideration is based on the contractor’s remuneration at
USD8.48/hour without VAT for servicing of the CHP plant.

The consideration under the New Repair Services Contract is to be paid
in cash via bank 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. In accordance with the Company’s procurement
policies and using tools such as the Company’s procurement portal, the
Company invited several organizations to take part in the tender in
relation to the required repair services. The Company’s procurement
managers, in line with the best-in-class experience and know-how of the
Company’s procurement policies, with approval from the Company’s bidding
committee chose the contractor offering the best terms and conditions
(taking into account the price, the fact that the contractor is
currently carrying out similar works and availability of professionals
with the required skill and experience) and then entered into the
contract 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 USD16.011 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
each of JSC “Bratskenergoremont”. 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

JSC “Bratskenergoremont” 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.

PRINCIPAL BUSINESS ACTIVITIES

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

“Russian Transport Company” LLC is principally engaged in the
organization of different kinds of transportation services.

“Automobile plant “URAL” JSC is principally engaged in producing and
selling automotive equipment.

JSC “Bratskenergoremont” is principally engaged in activities for
supporting of operability of the equipment, production of electric
installation, all-construction works and others.

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 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 Transport Logistics Services Contracts”

the contracts entered into between members of the Group
and
the associates of En+ as disclosed in the Company’s
announcements
dated 30 December 2016, 16 January 2017,
2 March 2017, 8
March 2017, 12 April 2017, 1 June 2017,
21 June 2017 and 4
July 2017 in relation to the receipt of
transport logistics
services by members of the Group.

 
“Previously Disclosed Purchase of Assets Contracts”

the agreements between members of the Group and the
associates
of Mr. Deripaska/En+, pursuant to which the
associates of Mr.
Deripaska/En+ agreed to sell assets to
members of the Group,
as disclosed in the
announcements of the Company dated 17
June 2016,
29 November 2016, 30 December 2016, 20 July 2017,
12
September 2017 and 30 October 2017.

 
“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, 23 May 2017,
7 July 2017,
12 September 2017, 4 October 2017 and 30 October 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.

Contacts

United Company RUSAL Plc

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