TAIF clarifies situation with Nizhnekamskneftekhim share offer
It became known that TAIF sent the offer to the Bank of Russia in early February
After the pre-notification procedure of the Bank of Russia ended, TAIF PJSC published the content of the Mandatory Offer to Purchase Common and Preferred Shares of Nizhnekamskneftekhim PJSC (offer) in accordance with regulations (norms, instructions) of existing legislation. It became known that TAIF sent the offer to the Bank of Russia in early February. The news about the offer (the offer to purchase) shares of the biggest petrochemical enterprise in Europe caused an expected interest in the media and is generating different kinds of conjectures and misinterpretations. Realnoe Vremya found out the details about Nizhnekamskneftekhim's shares.
Offer and some journalists' conjectures
The public offer of TAIF PJSC is drawing public attention of the online media in Tatarstan again. In 2015, an analogous buzz arose when the holding's subsidiary, Telecom Management, made a voluntary offer to purchase shares of Nizhnekamskneftekhim PJSC.
This time, having known from public sources that TAIF PJSC had sent an offer to purchase shares of Nizhnekamskneftekhim PJSC, colleagues drew several premature conclusions, including an intention of the holding to really buy out the enterprise's 100% of shares. Hurrying up to publish their conjectures, some online media also mentioned a wrong number of purchased shares.
It is said in the information published on 1 February 2018 on TAIF PJSC's page in Interfax that TAIF PJSC together with its affiliates became the owner of more than 75% of voting shares of Nizhnekamskneftekhim PJSC, and in accordance with the Federal Law on Joint-Stock Companies, it sent the Bank of Russia Mandatory Offer to Purchase Common and Preferred Shares of Nizhnekamskneftekhim PJSC under market conditions, which have formed in Nizhnekamskneftekhim PJSC's common and preferred shares in the last six months. An indication of the rest of the shares of Nizhnekamskneftekhim PJSC in the offer is a requirement of legislation of the Russian Federation, which provides minority shareholders with a right to leave the joint-stock capital of a public company if shareholders with more than 30, 50, 75% of voting shares appear in the company.
Nizhnekamskneftekhim's authorised capital is 1,830,239,750 rubles, it consists of 1, 611,256,000 common and 218,983,750 preferred shares of 1 ruble each. So the offer covers the shareholders with 18,46% of common shares of Nizhnekamskneftekhim and 65,77% of preferred shares, who have had the right to sell the shares that belong to them in the offered conditions (we emphasise it's a right, not an obligation).
Bank of Russia approved the offer
The documents related to the procedure for processing the offer as well as normative documents that regulate the procedure for making an offer (the Federal Law on Joint-Stock Companies and normative documents of the Bank of Russia) are in the public domain. After studying them, it becomes clear the submission of TAIF's application to purchase shares of Nizhnekamskneftekhim PJSC is enforcement of existing legislation.
We need to remind that the press release of TAIF PJSC as from 1 February said that TAIF PJSC together with its affiliates became the owner of more than 75% of voting shares of the enterprise. On its eve, on 31 January, the company sent the Bank of Russia the mandatory offer to purchase common and preferred shares of the enterprise under market conditions, which have formed in common and preferred shares in the last six months. So the 15-day term of approval of the offer in the Bank of Russia, during which the regulator could send an order to bring the offer into line with legislation of the Russian Federation in the presence of violations or technical errors, expired on 15 February. Then TAIF had to reveal the content of the offer and send it to Nizhnekamskneftekhim PJSC.
We need to notice that the offer couldn't be made without the prior consent of Nizhnekamskneftekhim and the FAS of the Russian Federation to purchase more than 75% of shares, which was obtained as early as January 2017.
Offer's mechanism
Share purchase price is the most frequently discussed issue in this kind of deals. Before understanding what share price consists of in a public offer, one needs to understand the very mechanism of this deal. In accordance with the law, the procedure for purchasing shares of a public joint-stock company presupposes making two types of offers: voluntary and mandatory. Voluntary offer is made if the purchaser intends to buy more than 30, 50, 75% of shares of the public joint-stock company. The purchaser chooses the number of purchased shares depending on his financial possibilities until the next threshold is reached.
Mandatory offer is made if the purchaser already bought the above-mentioned limited threshold number of shares. But in this case, the offer is made for the remaining number of shares in the next 35 days after crossing the threshold.
The presence of a bank guarantee, which must fully cover all obligations of the person who sends the offer is a considerable condition to make an offer, as the law requires in both cases. In case of TAIF's offer, the bank guarantee was 19,3bn rubles. Sberbank PJSC granted the guarantee, which is the most reliable bank amid revocation of credit organisations' licences.
The law provides the owners of Nizhnekamskneftekhim PJSC's shares with 70 days for the decision whether they will sell shares or not. So from 17 February to 27 April, the shareholders of Nizhnekamskneftekhim PJSC who want to sell their shares (accept the offer) can do this by submitting a corresponding application to the shareholder registry of Nizhnekamskneftekhim PJSC – Eurasian Registration on 6, Vishnevsky Street, Kazan or 1, Korabelnaya Street, Nizhnekamsk (the phone is (843) 236-27-52).
During this time, the shareholders who accepted the offer are recommended to check their data in the shareholder registry of Nizhnekamskneftekhim PJSC or the depository where shareholders keep their shares to get money for sold shares on time. Shareholders should pay special attention to bank details. The details of accounts that were earlier opened in crediting organisations such as Tatfondbank, Spurt, Intekhbank and others can be mentioned in personal data.
Price for Nizhnekamskneftekhim PJSC shares
Several media presupposed that TAIF deliberately waited until the time was ripe to purchase shares at a low price. However, share pricing is not a spontaneous procedure, it's defined by the law. Due to its requirements, the price of shares for buyout must be fixed based on two criteria. Firstly, it must not be lower than average prices defined as a result of auctions on the exchange for six months preceding the day when the offer was sent to the Bank of Russia. Secondly, if the purchaser bought or sold shares during the six months before the Mandatory Offer was sent, the price of purchased shares on the offer can't be lower than the highest price for which the shares were purchased during this time.
The enterprise's shares are listed on the Moscow Exchange PJSC. This is why while fixing the price for the purchase in the Mandatory Offer, TAIF PJSC considered a weighted average exchange price for common and preferred shares on this exchange. The purchasing price in the offer exceeded the mentioned weighted average prices and amounted to 50,25 rubles for one common and 27,63 rubles for preferred shares.
Based on the public offer procedure itself, which is controlled by the Bank of Russia, we can conclude that the buzz of the journalists from some media around the work of TAIF looks rather like a demonstration of love for the scoop and unwillingness to check out information that is in the public domain. As a result of the unchecked and distorted information in these media, unprofessional investors can be confused and make a wrong investment decision.