Polyus considering reverse takeover by KazakhGold

mineral resources

Polyus considering reverse takeover by KazakhGold

By SRI ⋅ December 2, 2009 ⋅

(SRI) - Russian miner Polyus Gold is reportedly considering a reverse takeover by its recently acquired subsidiary KazakhGold, according to the Vedomosti newspaper.

Since KazakhGold is listed on the London Stock Exchange (LSE), a reverse takeover and subsequent listing in London would provide the company’s shares with greater liquidity and the company itself with cheaper funding opportunities. Moreover, the company would likely be included in the FTSE 100 index as well.

Polyus Gold bought 50.1% of KazakhGold in August, paying with cash and shares. KazakhGold shareholders received $7.18 per share and 0.064% of Polyus shares.

Last week, KazakhGold also reported that its failure to report financial results for the first half of 2009 has triggered debt covenants that could force it repay its $200-million bond prematurely.

“KazakhGold has been informed that the Trustee of the Trust Deed for the Senior Notes has notified holders of the Senior Notes that an event of default has occurred under the terms and conditions of the Senior Notes,” KazakhGold said.

According to Renaissance Capital, an investment bank, KazakhGold is likely to seek a consent solicitation from its bondholders.

“As the bond is trading slightly above par, creditors are not really interested in an early redemption of the notes and consequently, are likely to agree on receiving even a small fee for consent that might be offered by the issuer,” Renaissance Capital said in a report.