SCM, Smart-holding announce completion of merger of metals and mining assets under Metinvest
The largest private company of Ukraine, System Capital Management (SCM, Donetsk), and private joint-stock company Smart-holding have announced the completion of the merger of their metal and mining assets under Metinvest B.V. (the Netherlands), the holding company of the Metinvest Group, according to a press release of Metinvest issued on July 14.
The transaction between SCM and Smart-Holding on the merger of their metals and mining assets under jointly managed company Metinvest B.V. was closed on July 14, 2014. At the last stage of the transaction, Smart Group contributed 100% of the shares in Trosilia Holdings Limited (Cyprus) to the statutory capital of Metinvest B.V. Trosilia Holdings Limited indirectly owns 46.15% of the shares in public joint-stock company Southern Iron Ore Enrichment Works.
The completion of the merger of the metals and mining assets of SCM and Smart-Holding was formalized by the signing of a shareholders’ agreement that regulates the contribution by the parties of their assets to Metinvest B.V. and sets out the relevant corporate governance rights of each party in Metinvest B.V. The Shareholders’ Agreement was signed on 7 July 2014 between SCM Limited (100% owned by SCM Group) and Smart Group companies.
In accordance with this agreement, in exchange for the contribution of Trosilia Holdings Limited into the statutory capital of Metinvest B.V., Smart Group received a number of additional rights with respect to Metinvest Group, namely a veto right in respect of certain matters within the scope of authority of the Supervisory Board and the General Shareholders’ Meeting of Metinvest B.V. Of the 10 supervisory board members of Metinvest B.V., seven members will be appointed by SCM and three by Smart-Holding. The CEO of Metinvest B.V. and Metinvest Group will be appointed by SCM; Smart-Holding will receive the right to appoint the second director (management board member) of Metinvest B.V.
In addition, as part of the completion of the transaction, one additional share of Metinvest B.V. was issued for the benefit of Smart Group. As a result, SCM’s interest in Metinvest B.V. will now be 71.24%, Smart-Holding’s interest will be 23.76%, and Clarendale Limited’s (affiliated with the former owners of PJSC Ilyich Iron & Steel Works of Mariupol) interest will be 5%.
As reported, SCM and Smart started to gradually combine their metals and mining assets in 2007. In 2014, SCM and Smart reached a definitive agreement regarding Metinvest B.V.’s asset composition and the volume of the corporate governance rights of each party.
System Capital Management (SCM) is a professional investor, the managing company of the biggest Ukrainian financial and industrial group focusing on three business areas: mining and metals, energy and finance. The company also operates in other sectors including telecommunications, media, real estate, grocery retail, clay production, petroleum products retail, agriculture, heavy engineering and transportation.
SCM Group includes Metinvest Holding, DTEK, First Ukrainian International Bank, Renaissance Capital Bank, ASKA and ASKA-Life insurance companies, Vega Telecommunications Group, Media Group Ukraine, ESTA Holding (real estate), Ukrainskiy Retail (grocery retail), UMG (clay production), Parallel (petroleum products retail), HarvEast (agriculture), Corum Group (heavy engineering), Portinvest transportation holding and others.
SCM Chief Executive Officer is Oleg Popov.
SCM is fully owned by businessman Rinat Akhmetov.
Smart-Holding is one of the largest production and investment groups in Ukraine, comprised of companies that share common strategic goals and business principles. Smart-Holding focuses on the industries that are the key sectors of the country’s economy. Smart-Holding invests in enterprises in such areas as metals and mining, oil and gas, banking, agriculture, retail, shipbuilding and real estate. Smart-Holding also participates in other projects as a portfolio investor.
Smart-Holding says its strategy aims to deliver the effective management of a diversified portfolio of investments, ensuring long term growth in its value. It says Smart-Holding’s enterprises are continuously looking for new business lines that could become development drivers both for the enterprises and the economy of Ukraine.