Uralkali Board of Directors Calls an EGM to Approve the Company’s Reorganisation and Adopts New Regulations

27.02.2012
Uralkali Board of Directors Calls an EGM to Approve the Company’s Reorganisation and Adopts New Regulations

Uralkali (the “Company”) (LSE: URKA), one of the world’s largest potash producers, announces the decisions made by the Board of Directors at its meeting on 24 February 2012.

The Board of Directors resolved to call an Extraordinary General Meeting of Shareholders (“EGM”) in the form of absentee voting to vote on the reorganisation of Uralkali. Uralkali shareholders will also be asked to approve certain interested-party transactions with OJSC Sberbank of Russia, including an amendment to the loan facility, dated 23 November 2011, and related currency swap and pledge transactions.

The proposed reorganisation envisages the consolidation of the Company with its affiliated companies CJSC Investment Company Silvinit-Resurs (“IC Silvinit-Resurs”), CJSC JV Kama (“JV Kama”) and OJSC Kamskaya Mining Company (“Kamskaya Mining Company”) in the form of a statutory merger. The deadline for receipt of voting ballots was set for 16 April 2012 (inclusive).

In order to facilitate the merger of IC Silvinit-Resurs into Uralkali, the Board resolved to increase Uralkali’s shareholding in this company to 100%. Uralkali will therefore acquire 3,717 ordinary shares of IC Silvinit-Resurs (representing 0.00006% of its share capital). In addition, the Board approved the transfer of 121,329 of Uralkali’s shares which are currently held on the Company’s balance sheet to JV Kama (representing 0.0039% of the Company’s share capital).

Merger of JV Kama and IC Silvinit-Resurs with Uralkali will result in the cancellation of Uralkali’s shares that will be held on their balance sheet as of the merger date, and, therefore, decrease of Uralkali’s share capital. Currently, JV Kama and IC Silvinit-Resurs hold 0.805% and 0.37% of Uralkali’s share capital, respectively. Moreover, Uralkali’s shares which have been acquired by Enterpro Serviñes Limited (member of Uralkali Group) through the Company’s share and GDR buyback programme by the time of completion of the proposed merger are expected to be transferred to JV Kama and cancelled in the merger. The proposed merger is expected to be completed by end of July 2012.

The purpose of the merger of Kamskaya Mining Company into Uralkali is to transfer to Uralkali the research and mining licence for the Polovodovsky block of the Verkhnekamskoe deposit of potassium and magnesium salts. This transfer is required to ensure the development and approval of the feasibility study for the Polovodovsky project in compliance with the terms of the licence agreement.

Uralkali’s Board also approved a new version of the Regulations on the Company’s Information Policy. The new Regulations set forth “black-out” periods, i.e. certain periods of the year when insiders having access to Uralkali’s financial and accounting results must abstain from carrying out transactions with the Company’s securities. The new Regulations also include procedures for transactions outside the “black-out” periods and establish a number of exceptions from the trading restrictions for certain transactions.

In addition, the Board of Directors approved the Regulations on Corporate Conflict Settlement. The new Regulations follow the recommendations of the Federal Service for Financial Markets of the Russian Federation with respect to settlement of corporate conflicts with shareholders regardless of the size of their shareholdings in the Company via out-of-court procedures.

Vladislav Baumgertner, Uralkali CEO, commented:

“The actions taken by Uralkali’s Board of Directors further enhance management efficiency and optimise the Company’s Group structure by improving its transparency for shareholders and investors. Our Board of Directors has resolved to propose the merger of three affiliated companies with Uralkali, which will result in cancellation of all of Uralkali’s treasury shares and transfer to its balance sheet of the licence for the development of the Polovodovsky block. Moreover, the Board has approved Regulations on Information Policy and on Corporate Conflict Settlement, which will continue our efforts to further improve our corporate governance standards. Accordingly, the new regulations include a number of policies which are considered “best practice” for public companies, both in Russia and worldwide”.

Uralkali (www.uralkali.com) is one of the world’s largest potash producers with a market share of about 20%. The Company’s assets consist of 5 mines and 8 ore-treatment mills situated in the towns of Berezniki and Solikamsk (Perm Territory, Russia). Uralkali employs over 23,000 people. Uralkali’s shares and GDRs are traded on the RTS-MICEX and LSE, respectively.

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Cardinal rules

Smoking in mines is prohibited.
Work at heights without wearing a safety harness is prohibited.
Work in electrical installations under voltage is prohibited.
It is forbidden to perform work and stay in the bottomhole zone during the operation of the mining machine.
Loading and unloading operations when people are in the danger zone are prohibited.
Working in underground mines with unsecured and/or unassembled roofing is prohibited.
It is forbidden to carry out repairs and maintenance of conveyors without disconnecting from energy sources, use of conveyors for transfer of people and goods (materials and/or equipment), crossing (either above or under) operating conveyors by employees are not allowed.
It is forbidden to carry out welding and flame work in underground mines and mine buildings without the necessary safety measures preventing fire.