October 23, 2017 / 3:04 PM / a year ago

Russia's En+ to issue new shares for Glencore after IPO - prospectus

MOSCOW (Reuters) - Russia’s En+ Group, which manages tycoon Oleg Deripaska’s aluminium and hydropower businesses, plans to issue new shares to Glencore after it completes its planned initial public offering, the IPO prospectus shows.

Russian tycoon Oleg Deripaska, president of En+ Group, attends the annual meeting of the World Economic Forum (WEF) in Davos January 23, 2013. REUTERS/Denis Balibouse

The new share issue will be part of a transaction whereby global commodities trader Glencore will swap its 8.75 percent stake in Russian aluminium giant Rusal (0486.HK) - in which En+ holds a 48.13 percent stake - for shares in En+ itself.

It is not clear if, and to what extent, the issue of new shares may dilute existing shareholdings in En+. Details of how the transaction would be structured were not available in the IPO prospectus, obtained by Reuters, and En+ declined to comment. The issue will be by closed subscription.

Glencore’s share swap is separate to En+’s planned IPO, through which En+ expects to raise a total of $1.5 billion (£1.1 billion) via new and existing shares, including in the form of global depositary receipts.

The swap with Glencore will occur after En+ completes its IPO, En+ said this month.

As a result of the swap, En+’s stake in Rusal, one of the world’s largest aluminium producers, will rise to 56.88 percent, according to the prospectus on the upcoming En+ IPO.

In the prospectus, En+ said that it has signed a non-binding agreement under which a Glencore entity, Amokenga Holdings Limited, will subscribe for the GDRs that represent newly issued En+ ordinary shares.

“Upon completion of the conversion transaction, which,

subject to certain conditions, is expected to occur following the offering, the company’s shareholding in Rusal will increase from 48.13 percent to 56.88 percent,” En+ said in the document.

A source familiar with En+ plans, who spoke on condition of anonymity, said that the new shares will be issued under closed subscription for Glencore to swap its stake.

The source said he was not aware of the final details of the swap and the new share offering.

The prospectus also said that Deripaska controls 82.65 percent of En+ via its two entities, B-Finance Limited and Basic Element Limited, with another 13 percent held by his family.

This month, 6.9 percent of En+ was transferred to Polina Deripaska, the document showed. It said Oleg Deripaska could buy back that stake.

Oleg Deripaska married Polina in 2001, but it is unknown if they are still married. En+ declined to comment on both the deal with Glencore and the 6.9 percent stake that was transferred to Polina Deripaska. Rusal declined to comment.

Reporting by Diana Asonova and Anastasia Lyrchikova; Additional reporting by Olga Popova; Writing by Katya Golubkova; Editing by Christian Lowe and Susan Fenton

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