Amendment of transshipment agreement with nakhodka trade sea port
EVRAZ plc ("EVRAZ", the "Company" and together with its subsidiaries, the "Group") announces today that it has signed a Deed of Amendment (“Transaction”) in relation to the Long-Term Transshipment Agreement (“LTA”) which was signed as part of the disposal of Joint Stock Company EVRAZ Nakhodka Trade Sea Port (the "Nakhodka Port") to EVRAZ’ majority shareholder Lanebrook Limited ("Lanebrook") on 3 May 2017 and which was approved by the independent shareholders of the Company on 23 May 2017.
Key Commercial Highlights
The LTA granted EVRAZ with the tolerance level of 200,000 tonnes of volume per annum over the life of the contract, without being exposed to the “take-or-pay” clause envisaged by the minimum guaranteed volumes.
In addition to the current tolerance of 200,000 tonnes per annum EVRAZ and the Nakhodka Port have agreed on additional tolerance for steel products that grant EVRAZ additional flexibility under the take-or-pay exposure
In addition, the parties agreed to fix the maximum volume for the Nakhodka Port to transship additional volumes of coal shipped in excess of the minimum volumes and annual tolerance levels as described above at current market rates.
The Transaction will allow EVRAZ: (i) to mitigate its take-or-pay risks in relation to the LTA and (ii) to get a possibility to transship additional volumes of Coal in a strategic pathway of Far East at attractive rates
As announced on 4 September 2018, Lanebrook distributed all the shares it held in the Company to its direct shareholders (Crosland Global Limited and Greenleas International Holdings Ltd) in proportion to their holdings in Lanebrook who continue to wholly own Nakhodka Port.
Pursuant to UK Listing Authority ("UKLA") Listing Rule 11.1.4R, Nakhodka Port is classified as a related party of EVRAZ, due to its direct shareholders also being substantial shareholders in the Company. The Transaction, therefore, constitutes a smaller related party transaction as defined under UKLA Listing Rule 11.1.10R and EVRAZ has accordingly obtained a written confirmation from a sponsor that the terms of the transaction are fair and reasonable as far as shareholders of EVRAZ are concerned.
As part of the Nakhodka Port disposal to Lanebrook in 2017, East Metals AG, a fully owned subsidiary of the Company (“EMAG”), entered into a LTA with the Nakhodka Port. EMAG took the obligation to ship certain volumes of coal and steel products through the Nakhodka Port for five years at fixed rates, secured by a “take-or-pay” clause. Further details of the LTA can be found in the Shareholder Circular which is available on EVRAZ's website www.evraz.com/investors/information/general_meeting/