The boards of Amtel-Vredestein and Russian company Sibur Holding have reached an agreement "on the terms of the aquisition by Amtel of the entire issued share capital of Sibur Russian Tyres," say Amtel-Vredestein officials.
Sibur Holding will be issued 159.3 million new ordinary shares in Amtel-Vredestein as part of the deal, which the Russian Federal Antimonopoly Service has approved, according to Interfax. (Specifically, the service has granted permission for Sibur Holding to acquire more than 50% stake in Amtel-Vredestein.)
"Amtel-Vredestein and Sibur Russian Tyres have complementary product
portfolios and the enlarged group will have a material presence in all the major segments of the Russian tire market."
Amtel-Vredestein sells passenger tires under the Vredestein, Amtel and Maloya brand names. The tires are built in the Netherlands and Russia.
Sibur Russian Tyres, a wholly owned subsidiary of Sibur Holding, makes Cordiant brand passenger and Tyrex brand truck tires. The company has 150 regional distributors in Russia and a subsidiary based in Germany.
Amtel-Vredestein recently issued the following statement regarding the deal:
"Amtel-Vredestein also announces that it has reached an agreement with regard to an interim funding facility of $40 million to be provided by Sibur Russian Tyres.
"The interim funding is being provided in two tranches: the first tranche of $20 million is immediately available to Amtel-Vredestein upon signature of the definitive agreement governing the terms of the acquisition. The second tranche of $20 million is immediately available upon Amtel-Vredestein’s shareholders passing the required resolutions.
"The amount raised through the interim funding is intended to enable Amtel-Vredestein to meet its liquidity requirements until completion of the acquisition.
"Amtel-Vredestein also announces that it proposes to raise approximately $150 million (before expenses) through the private placement of up to 79 million new ordinary shares at a subscription price of not less than $1.89 per new ordingary share.
"Of the total placement, Sibur Holding has conditionally agreed to subscribe for such number of new ordinary shares as have an aggregate subscription price of $50 million at the placement price.
"Amtel-Vredestein has undertaken to appoint one or more persons to endeavour to procure subscribers for the balance of the new ordinary shares in the placement. The placement is not underwritten.
"The acquisition and the placement are subject to a number of conditions, including the passing by the shareholders of Amtel-Vredestein of certain resolutions in connection with the acquisition and the placement, which will be proposed at an extraordinary general
meeting of Amtel-Vredestein following the posting of an explanatory
circular to Amtel-Vredestein shareholders... if the acquisition completes, Sibur Holding will own 70% of the enlarged group as a
result of the acquisition alone and not less than 60.5% of Amtel-Vredestein’s enlarged share capital as a result of the acquisition and placement, assuming Sibur Holding subscribes only for the Sibur Holding placement shares under the placement, and the
placement price is not less than $1.89.
Upon completion of the deal, Vadim Gurinov of Sibur Russian Tyres will be named chief executive of Amtel-Vredestein.
"In the light of Amtel-Vredestein’s difficult financial position, as outlined in previous announcements, the transactions announced today are considered essential to the continued viability of Amtel-Vredestein as a going concern and, without the transactions, Amtel-
Vredestein's debt restructuring cannot succeed.
"Due to the size of the Acquisition, its impact on Amtel-Vredestein and the fact that, being privately held, limited information is available on Sibur Russian Tyres in the public domain, the Amtel-Vredestein GDRs have been suspended from trading from the date of
this announcement in accordance with United Kindgom (stock) listing rules."
Both acquisition and placement are expected to be completed during the second half of 2008.
Petr Zolotarev, CEO and chairman of the Executive Board of Amtel-Vredestein, says the transaction "is a significant achievement for Amtel-Vredestein and Sibur Russian Tyres and for their shareholders as well as all stakeholders.
"The combination of the two businesses, as well as the placement, will provide the enlarged group with a stronger balance sheet and essential funding to continue operating as one of the leading global tire manufacturers, creating at the same time one of the
leading companies in the Russian market.
Going forward," he continues, "the enlarged group will benefit from greater economies of scale enabling it to compete more efficiently. ”
