Terms of GDR Buy-Back Programme to Drive Shareholder Value
Amsterdam, 22 April 2013. Zhaikmunai L.P (“Zhaikmunai” or the “Partnership”) is pleased to announce the terms of a long-term GDR Buy-Back programme. The programme will commence following the release of Zhaikmunai’s unaudited consolidated accounts for the first quarter ended 31st March 2013 expected in the week of May 13, 2013.
Zhaikmunai, a leading independent oil and gas business engaged in the production, development and exploration of oil and gas in the former CIS, is pleased to announce that it is commencing a Buy-Back Programme with the intention to purchase up to US$ 50 million of its GDRs (the “Buy-Back Programme”).
The Buy-Back Programme has been approved by the Board of Directors of the General Partner (the “Board”) in recognition of the Partnership’s strong financial position and significant cash generating abilities. In addition, the Board believes that acquiring GDRs at current levels, which are at a significant discount to fair value, represents an excellent value proposition for Zhaikmunai security holders as a whole.
Zhaikmunai generates significant free cash flow and has a robust balance sheet and excellent credit metrics. As at 31 December 2012, the Partnership had a cash and cash equivalent position of US$ 251 million and a net debt of less than 1x LTM EBITDA. As a result of this strong financial position, Zhaikmunai will allocate up to 10 percent of EBITDA on a quarterly basis to buying back GDRs.
As previously announced, on 28 March 2013 Zhaikmunai’s limited partners approved by special resolution amendments to Zhaikmunai’s Limited Partnership Agreement to allow for the implementation of the Buy-Back Programme and authorised the Board to implement a Buy-Back Programme for the period until the conclusion of the 2014 annual general meeting of limited partners.
The Buy-Back Programme is expected to initially continue for approximately 12 months and to involve maximum consideration of US$ 50 million. Thereafter, proposed annual extensions to the duration of the Buy-Back Programme may be submitted by the Board to the limited partners for approval.
Zhaikmunai remains committed to investment in the Partnership’s growth and expects to generate sufficient revenue to drive future investment and deliver value for security holders. This investment in growth will be pursued in tandem with a balanced approach to a return of excess liquidity to security holders. In September 2012 the Partnership announced the adoption of a dividend policy and made its inaugural cash distribution. The Buy-Back Programme represents a complementary component of this commitment to driving returns to security holders and the Board is confident that the implementation of the Buy-Back Programme will not impact the Partnership’s ability to implement organic growth initiatives or its flexibility to drive further growth through other value-accretive, focused initiatives.
The objective of the Buy-Back Programme is to reduce the number of issued GDRs of the Partnership and repurchased GDRs may also be used to meet obligations arising from Zhaikmunai’s employee share option plan.
Purchases of GDRs pursuant to the Buy-Back Programme will be conducted by Zhaikmunai’s brokers, Deutsche Bank AG, London Branch (“Deutsche Bank”) and VTB Capital plc (“VTB Capital”), acting on its behalf in accordance with the requirements of the FCA’s Code of Market Conduct in respect of buy-backs of listed securities. The Buy-Back Programme will be in place until the maximum consideration of US$ 50 million has been paid but, in any event, no later than 31st December 2014 unless extended with the approval of Zhaikmunai’s limited partners. The Buy-Back Programme may be varied or terminated at any time at the Board’s sole discretion. Zhaikmunai will provide periodic updates as to the implementation of the Buy-Back Programme in a transparent manner and in accordance with the requirements of the EU Buy-Back and Stabilisation Regulation.
Mr. Frank Monstrey, Chairman of Zhaikmunai, commented:
“Zhaikmunai continues to make significant progress, delivering on its operational, strategic and financial milestones and de-risking both the current position and the future. The Board remains highly confident in Zhaikmunai’s financial position, cash generation and growth prospects and does not believe that the recent GDR price performance reflects Zhaikmunai’s underlying prospects. Our financial position provides us with a platform from which we can simultaneously pursue the next stage of our development and look for all viable means to deliver value for our equity holders. In this context, the proposed acquisition of the GDRs represents a highly attractive investment opportunity in the best interests of the Partnership and its equity holders.”
Further information
For further information please visit www.zhaikmunai.com
Further enquiries
Zhaikmunai LP – Investor Relations
Bruno G. Meere
Kirsty Hamilton-Smith
ir@nog.co.uk + 31 20 737 2288
Deutsche Bank + 44 (0) 207 545 8000
Ben Lawrence
JM Hafner
Rob Abbott
VTB Capital plc + 44 (0) 203 334 8000
Alexander Metherell
Marcus Brown
Giles Coffey
Pelham Bell Pottinger + 44 (0) 207 861 3232
Philip Dennis
Elena Dobson
About Zhaikmunai
Zhaikmunai is an independent oil and gas enterprise currently engaging in the production, development and exploration of oil and gas in north-western Kazakhstan. Its Global Depositary Receipts (GDRs) are listed on the London Stock Exchange (Ticker symbol: ZKM). Zhaikmunai’s principal producing asset is the Chinarevskoye field, in which it holds a 100% interest and is the operator, through its wholly-owned subsidiary Zhaikmunai LLP. In addition, Zhaikmunai holds a 100% interest in and is the operator of the Rostoshinskoye, Darinskoye and Yuzhno-Gremyachenskoye oil and gas fields. Located in the pre-Caspian basin to the north-west of Uralsk, these exploration and development fields are approximately 60 and 120 kilometres respectively from the Chinarevskoye field.
Forward-Looking Statements
Some of the statements in this document are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of the Partnership or its officers with respect to various matters. When used in this document, the words “expects,” “believes,” “anticipates,” “plans,” “may,” “will,” “should” and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcomes to differ materially from those suggested by any such statements.
Deutsche Bank
Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin – Federal Financial Supervisory Authority) and authorised and subject to limited regulation by the Financial Conduct Authority (the “FCA”). Details about the extent of Deutsche Bank AG’s authorisation and regulation by the FCA are available on request.
VTB Capital
VTB Capital Plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
