AFARAK GROUP AND LL RESOURCES GMBH SIGN A COMBINATION AGREEMENT –
AFARAK TO BECOME MAJOR PLAYER IN SPECIFIC COMMODITIES
Afarak Group and LL Resources GmbH sign a
combination agreement – Afarak to become major player in specific
commodities
Afarak Group
SE Insider
information, 12 May
2023 at 9:00 EET
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DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
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RELEASE, PUBLICATION OR DISTRIBUTION WOULD CONSTITUTE A VIOLATION
OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. FOR
FURTHER INFORMATION, PLEASE SEE THE “IMPORTANT NOTICE” BELOW.
Afarak Group SE (“Afarak” or “Afarak Group”), a
vertically integrated ferroalloys producer supplying specialist
products to the steel and stainless-steel industries, has signed an
agreement (“Combination Agreement”) on combining LL Resources GmbH
(“LLR”), a globally operating mining, processing and trading
establishment with focus on ferro-alloys, steel products, scrap,
coke, coal, bitumen, fertilizer and other materials, into Afarak
Group.
The whole transaction is carried out under
Finnish law, but it has been structured as an “Einbringung” under
Austrian tax law. In the European Union Council Directive
90/434/EEC of 23 July 1990 on the common system of taxation
applicable to mergers, divisions, transfers of assets and exchanges
of shares concerning companies of different Member States this term
has been translated as “transfer of assets” in English or
“varojensiirto” in Finnish. Under the Finnish Companies Act the
“Einbringung” is a directed share issue to the current shareholders
of LLR against a contribution in kind. The said transaction is
hereinafter described as the “Transaction” or “Combination”.
The Transaction is executed by Afarak issuing
new shares as consideration to the shareholders of LLR. The total
consideration (“Consideration”) of the Transaction to LLR’s current
shareholders has been agreed to have a value of approximately EUR
59,5 million. The Consideration will be paid in full by issuing
140,000,000 new Afarak shares (“Consideration Shares”) in
connection with the execution of the Transaction. The Consideration
Shares will be directed for subscription of the shareholders of
LLR’s shareholders. Following execution, LLR will become a fully
owned subsidiary of Afarak. Consequently, the former shareholders
of LLR will hold in aggregate approximately 35 % of the total
amount of shares and votes of Afarak following execution of the
Transaction.
The completion of the Transaction is subject to
e.g.
- approval of the Transaction by the
Shareholders of Afarak;
- merger control approval in Austria
and Germany;
- Foreign Direct Investment (FDI)
clearance and approval in Austria;
- approval of the Prospectus by the
Finnish Financial Supervisory Authority for the listing of the
Consideration Shares in Finland and needed approval in the UK;
- fulfilment of other customary terms
and conditions of a transaction of this type.
Founded in 2011, LLR has rapidly developed into
a prominent player in the global commodity sector with majority of
its business in the steel industry supply chain. With a turnover of
EUR 406,373,000 in 2022, LLR acts mainly as a global trading and
recycling company offering a wide variety of ferro-alloys and
metals for the steel industry, but developing in other commodities
as well.
The LLR group is headed by the parent company
LL-resources GmbH in Graz, Austria, having an extended trading
activity and holding, among other things, the following other
assets:
- LEMETCO GmbH in Duisburg, Germany,
a well-known trading company;
- OELSCHLAEGER GmbH in Brüggen,
Germany, a recycling company producing premium quality secondary
aluminum;
- L3-Logistics GmbH and L3-Logistics
GmbH-Duisburg GmbH, a well-known logistics service provider and
warehousing company;
- Nordic Ferro Alloys A.B., in
Fagersta, Sweden, a recycling company producing premium quality
ferro-titanium;
- S.I.A LLR-Ecotech, in Riga, Latvia,
a recycling company producing ferro-titanium;
- ASFA D.O.O.in Serbia;
- LL Resources Deutschland
GmbH;
- MSN GmbH & Co. KG; and
- LL Resources Immobilien Deutschland
GmbH
- LL Resources USA, LLC
Additionally, the LLR group holds minority
shareholdings in the following entities:
- S.I.A eVan, in Liepāja, Latvia, a
catalyst recycling company producing ferro-vanadium;
- Wire d.o.o, In Limbuš, Slovenia,
producing cored wire for the steel and foundry industry.
Together with Afarak’s EWW smelter in Germany
and its magnesite and refractory operations in Serbia, the newly
formed commodity group would present a European alternative to the
steel and foundry industry with a strong focus on ESG
(Environmental, Social and Governance).
KEY FIGURES of LLR
2021 AND 2022 AUSTRIAN GAAP
EUR 1.000.000 |
1.1.-31.12.2021 |
1.1.-31.12.2022 |
Net Sales |
278.2 |
406.4 |
EBITDA |
13.1 |
22.9 |
EBIT |
13.7 |
24.4 |
|
|
|
|
31.12.2021 |
31.12.2022 |
Equity ratio, % |
29.2% |
29.0% |
Equity |
15.6 |
21.9 |
Balance sheet total |
53.3 |
75.5 |
The new entity to
emerge with the Combination would have a turnover of approximately
674.5 EUR million and the Group would employ about 730 people.
Subject to the completion of the Combination,
LLR’s business will be reported as part of Afarak’s Ferro-Alloy
segment.
BUSINESS BENEFITS AND BENEFITS FOR THE
INVESTORS
Thorstein Abrahamsen,
Chairman of the Board, Afarak Group SE:
“In line with Afarak's growth strategy, we are
seeking growth both organically and through acquisitions. With the
combination of the two companies, we will have additional skilled
personnel, which enables the Afarak Group to continue to grow and
develop. As a result of the combination, we achieve synergy gain
due to the similarity between Afarak’s and LLR's businesses. When
we combine our expertise, we are capable to offer a wider range of
products to our clients, operate more efficiently, improve our
profitability and respond to competition. In the future, Afarak
will be more able than before to diversify its revenue
streams.”
Dr. Roman
Lurf, Managing
Director, LL Resources
GmbH:
“Over the last decade LL-resources GmbH (LLR)
has proven that it is able to deliver sustainable and extraordinary
growth combined with significant stakeholder return. This is part
of LLR’s company DNA which is going to support the combined company
to maximize shareholder value.
Together we have a proven strategy to realize
the full shareholder value of the combination, including an
exceptional pool of talented professionals, stable and profitable
production units, and many new projects in the pipeline already.
Additionally, our company cultures are well aligned, with strong
commitments to zero harm, inclusion, and diversity, and
industry-leading environmental, social and governance performance.
With this combination we expect to generate synergies and unlock
significant potential along our value chains and the combined
company is going to represent a leading strategic European based
but globally acting commodity player focused on sustainable
commodities for our first-class partners around the world.”
LLR in
brief:
LLR group’s revenue in 2022 was EUR 406,373,000
(EUR 278,217,000 in 2021), while the group’s EBITDA in 2022 was EUR
22,920,000 (EUR 13,132,000 in 2021) and the consolidated net assets
value in 2022 was EUR 21,885,000 (EUR 15,567,000 in 2021). LLR’s
financial statement have been prepared in compliance with the
Austrian Accounting Standards. LLR group employs around 130
employees.
Transaction in brief:
Subject to the completion of the Transaction,
Afarak will pay EUR approximately EUR 59.5 million as the
Consideration for LLR’s share capital to LLR’s current owners.
The current owners of LLR are: LLR-Holding GmbH,
Motus Capital GmbH, Trade Services Handels GmbH and GK Consulting
S.à.r.l.
The Consideration will be paid in full by means
of 140,000,000 new Afarak shares to be issued and directed to LLR’s
current shareholders in proportion to their current ownership in
LLR in connection with the execution of the Transaction.
LLR's net debt in the financial statement of
2022 amounted to EUR 48,173,000 according to the Austrian
Accounting Standards. In accordance with the terms of the
Combination Agreement, Afarak will receive LLR’s cumulative cash
flow from 1 January 2023 until the completion of the Transaction
(the so-called locked box mechanism).
The subscription price of the Consideration
Shares to be issued has been agreed at 0.425 per share,
corresponding to the volume-weighted average price of the Afarak
share on Nasdaq Helsinki Oy's stock market listing for 20 trading
days before the Letter of Intent regarding this transaction was
signed.
Share issue in brief
After the new Consideration Shares subscribed in
connection with the Transaction have been registered with the
Finnish Trade Register, the total number of issued and outstanding
shares in Afarak will be 407,041,814.
The number of Consideration new shares to be
issued and subscribed in connection with the Transaction represents
approximately 35 per cent of Afarak's share capital after the
registration of the Consideration Shares with the Finnish Trade
Register. The Consideration Shares entitle Afarak to potentially
distribute a full dividend and other distribution of funds, as well
as producing other shareholder rights in the company from the time
after the Consideration Shares have been registered with the
Finnish Trade Register and Afarak's shareholders’ register.
Afarak will apply for the admission of the
Consideration Shares (being of the same share class as Afarak’s
current shares) for public trading on Nasdaq Helsinki Oy's stock
exchange listing and for the London Stock Exchange after the
Consideration Shares have been registered with the Finnish Trade
Register.
Conditions and
estimated Schedule of the Transaction
The completion of the Transaction is subject to
e.g.:
- approval of the Transaction by the
Shareholders of Afarak;
- merger control approval in Austria
and Germany;
- Foreign Direct Investment (FDI)
clearance and approval in Austria;
- approval of the Prospectus by the
Finnish Financial Supervisory Authority for the listing of the
Consideration Shares in Finland and needed approval in the UK;
- fulfilment of other customary terms
and conditions of a transaction of this type.
Afarak estimates the relevant authority
clearances and approval will take some time and the current best
estimate is that the Transaction would be executed in the third
quarter of 2023.
Financial impact to Afarak
Subject to the completion of the Transaction, it
will have a financial impact on Afarak. At this stage, Afarak will
keep its 2023 guidance unchanged until the completion of the
Transaction is confirmed.
Important notice
This release is not an offer for sale of
securities in the United States. Securities may not be sold in the
United States absent registration with the United States Securities
and Exchange Commission or an exemption from registration under the
U.S. Securities Act of 1933, as amended. The Company does not
intend to register any part of the share issue in the United States
or to conduct a public offering of securities in the United
States.
The distribution of this release may be
restricted by law and persons into whose possession any document or
other information referred to herein comes should inform themselves
about and observe any such restrictions. The information contained
herein is not for publication or distribution, in whole or in part,
directly or indirectly, in or into United States, Australia,
Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa or
any other jurisdiction where such publication or distribution would
violate applicable laws or rules or would require additional
documents to be completed or registered or require any measure to
be undertaken in addition to the requirements under Finnish law.
Any failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction. This
release is not directed to,and is not intended for distribution to
or use by, any person or entity that is a citizen or resident or
located in any locality, state, country or other jurisdiction where
such distribution, publication, availability or use would be
contrary to law or regulation or which would require any
registration or licensing within such jurisdiction.
This release does not constitute a prospectus as
defined in the Prospectus Regulation and, as such, it does not
constitute or form part of, and should not be construed as, an
offer to sell, or a solicitation or invitation of any offer to buy,
acquire or subscribe for, any securities or an inducement to enter
into investment activity in relation to any securities. No part of
this release, nor the fact of its distribution, should form the
basis of, or be relied on in connection with, any contract or
commitment or investment decision whatsoever. The information
contained in this release has not been independently verified, does
not purport to be full or complete and may be subject to change. No
representation, warranty or undertaking, expressed or implied, is
made as to, and no reliance should be placed on, the fairness,
accuracy, completeness or correctness of the information or the
opinions contained herein. The Company or any of its affiliates,
advisors or representatives or any other person, shall have no
liability whatsoever (in negligence or otherwise) for any loss
however arising from any use of this release or its contents or
otherwise arising in connection with this release. Each person must
rely on their own examination and analysis of the Company, its
securities and the Transaction, including the merits and risks
involved.
This release includes forward-looking statements
that are based on present plans, estimates, projections and
expectations and are not guarantees of future performance. They are
based on certain expectations and assumptions, which, even though
they seem to be reasonable at present, may turn out to be
incorrect. Investors should not rely on these forward-looking
statements. Numerous factors may cause the actual results of
operations or financial condition of the Company to differ
materially from those expressed or implied in the forward-looking
statements. The Company or any of its affiliates, advisors or
representatives or any other person undertakes no obligation to
review or confirm or to release publicly any revisions to any
forward-looking statements to reflect events that occur or
circumstances that arise after the date of this release. Further,
there can be no certainty that the transaction will be completed in
the manner and timeframe described in this release, or at all.
Helsinki, May 12, 2023
AFARAK GROUP SE
Board of Directors
For additional information, please
contact:
Afarak Group SE
Guy Konsbruck, CEO, +356 2122
1566, guy.konsbruck@afarak.com
Financial reports and other investor information
are available on the Company's website: www.afarak.com.
Afarak Group is a specialist alloy producer
focused on delivering sustainable growth with a Speciality Alloys
business in southern Europe and a FerroAlloys business
in South Africa. The Company is listed on NASDAQ Helsinki
(AFAGR) and the Main Market of the London Stock
Exchange (AFRK).
Distribution:NASDAQ HelsinkiLondon Stock
ExchangeMain media
www.afarak.com
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