Gold Miner Polymetal to Sell Russian Unit For $3.7 Billion

SEATTLE (Scrap Monster): Gold miner Polymetal International Plc will sell its sanctioned Russian unit in a deal worth a total of $3.69 billion, the Kazakhstan-registered company said. 

The business will be sold to Russian firm Mangazeya Plus with completion marked for end-March, Polymetal said in a statement on Monday. After tax, Polymetal is expected to receive $300 million in cash as the deal includes third-party debt and intra-group arrangements. 

Following the invasion of Ukraine, Polymetal redomiciled from Jersey, deemed an unfriendly jurisdiction by the Kremlin, to Kazakhstan to unblock international payments, including dividends, from Russia. After the US sanctioned the St. Petersburg-based unit in May, Polymetal began a search for a buyer for the assets, which accounted for 70% of its revenue last year.

While many large multinationals publicly declared they’d withdraw from Russia after President Vladimir Putin sent troops into Ukraine, there are fewer examples of big business owners splitting their assets or selling out. Dutch-registered Yandex NV agreed to sell its Russian business for about $5.2 billion this month, and major shareholders of GlobalTrans and Qiwi said they sold their assets earlier this year.

Payments under the deal will be denominated in rubles. The amounts include a dividend of nearly $1.43 billion before tax, that the Russian unit will pay to the Kazakh company. Polymetal will use about $1.15 billion of that to pay intragroup debt and interest to the Russian company. The transaction value also includes $2.2 billion of net debt retained by Polymetal Russia, while the buyer will pay $50 million in cash to the Kazakh company after the deal is completed.

Polymetal will continue to use the Amursk POX processing facility in Russia to process gold concentrate until it builds its own plant in Kazakhstan. The company is in contact with the US authorities to ensure that won’t lead to secondary sanctions.

Mangazeya Plus is a part of a Russian group, controlled by entrepreneur Sergey Yanchukov. Neither he nor the company is sanctioned. The sale was backed by the Omani government-owned fund that became a major Polymetal shareholder in January. 

Courtesy: www.bnnbloomberg.ca