Russian mining and metals company Mechel revealed on Wednesday that it has reached an agreement to take over Oriel Resources for a total of US$1.498mn. The Russian miner first announced its interest in the London-listed Oriel Resources in early March.
Under the terms of the offer, Oriel shareholders are set to receive 219.86 US cents in cash for each Oriel share. The offer is a 13.7% premium to the closing middle market price of 96.75p as recorded on February 29, 2008, the last business day before Mechel announced its offer.
Commenting on the offer, Igor Zyuzin, chief executive officer, of Mechel says: "The acquisition of Oriel will enable Mechel to increase its competitiveness by expanding the existing ferroalloy business, entering new markets and operating new production facilities.”
Executive chairman of Oriel, Sergey Kurzin, adds: “In the four years since Oriel's foundation, it has managed to build a valuable portfolio of significant ferroalloy assets. Nevertheless we believe that the offer from Mechel provides an attractive opportunity for Oriel Shareholders to realise their investment.”
Mechel is a low-cost integrated mining and metals group which encompasses mining, steel production and processing and power generation. It has facilities in Russia, Romania, Bulgaria and Lithuania. Mechel is the largest producer of coking coal in Russia with a 64% share for hard coking coals. It is also Russia's largest exporter of coking coal concentrate.
Mechel’s energy business consists of power generation capabilities in Russia, a 49% stake in a Bulgarian coal-fired power station and a power sales company which controls 50% of the energy market in the Kemerovo region of Siberia.
Mechel made its debut in the international syndications market last year, closing general syndication on a dual-tranche US$2bn loan in January. This facility was raised to refinance short-term loans taken out to support the acquisition of mining assets. The facility was lead arranged by ABN Amro, BNP Paribas, Calyon, Natixis, SMBC, Soci&eaute;té GénéraleGTR Jan/Feb 2008).
Oriel is chrome and nickel mining and processing company based in London, which mainly operates in Kazakhstan and Russia. Current operations are the Voskhod chromite mine and the Shevchenko nickel project, located in north-west Kazakhstan, and the Tikhvin ferrochrome smelting plant in Russia.
Last Updated March 27, 2008
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